Question: please help me!! 1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of

1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) 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 Beta) that will require an iniltal investment of $2,225,000. The project is expected to generate the following net cash flows: Happy Dog Soap Company's weighted average cost of capital is 8%, and project Beta has the same risk as the firmis average project. Based on the cash flows, what is project Beta's NPV? Making the accept or reject decision Happy Dog Soap Company's decision to accept or reject project Beta is Independent of its decislons on other projects. If the firm fallows the Nip thethod, it should project Beta. Suppose your boss has asked you to analyze two mutually exclusive projects-project A and project B. Both projects reculre the same investment. amount, and the sum of cash inflows of Project A is larper than the sum of cash inflows of project B. A coworker told you that you dont need to do an NPV analysis of the projects because you already know that project A wil have a larger NPV than project B, Do you agree with your coworikeris statement? No, the NPV calculation will take into account not only the grojects' cash inflows but also the timing of cash inflows and outhows. Consequently, project B could have a larger NPV than project A, even though project A has larger cash inflows. No, the NPV calculation is based on percentage refurns, so the size of a project's cash fows does not affect a project's NPV. Yes, project A wul alwoys have the largest NPV, because its cash intiows are greater than project B's cash inflows
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