3. Net present value method

Consider the case of Rydell Manufacturing:

Rydell Manufacturing is evaluating a proposed capital budgeting project that will require an initial investment of $176,000. The project is expected to generate the following net cash flows:

Year	Cash Flow
Year 1	$46,000
Year 2	$51,900
Year 3	$49,200
Year 4	$48,900

Assume the desired rate of return on a project of this type is 10%. What is the net present value of this project? (Note: Do not round your intermediate calculations.)

$23,773.90

$10,285.40

$15,358.30

-$20,925.21

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

Reject the project

Accept the project