Evaluating cash flows with the NPV method The net present value (WPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider this case: Suppose Happy Dog Soap Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initat investment of $450,000. The project is expected to generate the following net cash flows: Happy Dog Soap Company's weighted average cost of capital is 7%, and project Alpha has the same risk as the firm's average project. Based on the cast flows, what is project Aipha's net present value (NPV)? $962,950$1,362,950$1,462,950$512,950 Making the accept or reject decision Happy Deg Soap Company's decision to accept or reject project Alpha is independent of its decisions on other projects. If the firm follows the NeV method, it should project Apha. Happy Dog Soap Company's weighted average cost of capital is 7%, and project Apha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value (NPV)? $962,950$1,362,950$1,462,950$512,950 Making the accept or reject decision Happy Dog Soap Company'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 Npha. Which of the following statements best explains what it means when a project has an NPV of $0 ? When a project has an NPV of 50, the project is eaming a rate of refurn less than the project's weighted average cost of capital. It'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 eaming a rate of return equal to the project's weighted average cost of capital. It's ok to accept a project with an NPV of 50 . because the project is earning the required minimum rate of return. When a project has an NPV of $0, the project is earning a profit of $0. A firm should reject any project with an Nov of 10 , because the project is not profitable