3. Net present value method

Consider the case of McCall Enterprises:

McCall Enterprises is evaluating a proposed capital budgeting project that will require an initial investment of $136,000. The project is expected to generate the following net cash flows:

Year	Cash Flow
Year 1	$40,000
Year 2	$50,900
Year 3	$46,200
Year 4	$43,900

Assume the desired rate of return on a project of this type is 9%. What is the net present value of this project? (Note: Do not round your intermediate calculations.)

$10,313.50

$15,732.70

$18,163.50

$20,968.70

Suppose McCall Enterprises has enough capital to fund the project, and the project is not competing for funding with other projects. Should McCall Enterprises accept or reject this project?

Accept the project

Reject the project