3. Net present value method Consider the case of Darling Corporation: Darling Corporation is evaluating a proposed capital budgeting project that will require an initial investment of $152,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $42,400 Year 2 $51,300 Year 3 $47,400 Year 4 $45,900 Assume the desired rate of return on a project of this type is 11%. What is the net present value of this project? (Note: Do not round your intermediate calculations.)

$4,725.40 $7,505.40 -$7,271.35 $12,903.30 Suppose Darling Corporation has enough capital to fund the project, and the project is not competing for funding with other projects. Should Darling Corporation accept or reject this project?

Accept the project Reject the project