Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of the most common and preferred criteria that penerally lead to good investment decisions. Consider the case of Hungry Whale Electronics? Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $600,000. The project is expected to generate the following net cash flows: The company's weighted average cost of capital is 7\%, and project Apha has the same risk as the firm's average project. 8ased on the cash flows, what is project Alphe's net present value (NPV)? $1,239,271 $1,007,125 $839,271 $1,214,271 Making the accept or reject decision Hungry Whale Electronics's decision to accept or reject project Alpha is independent of its decisions on other projects. If the firm follows the NPV method, it should project Alpha. Which of the following statements best explains what it means when a project has an NPV of s0? When a project has an NFV of $0, the project is earning o rate of relurn less than the project's weighted average cont of capital. th's ok to accept the project, as long as the project's profit is positive. When a project has an NPV of $0, the project is earning a profit of $0. A firm should reject amy project with an NPV of $0, because the project is not profitable. When a project has an NPV of $0, the project is earning a rate of return equal to the project's welghted average cost of capital, It's ok to accept a project with an NPV of $0, because the project is earning the required minimum rate of return