The net present value (NPV) method estimates how much a potential project will contribute to -Select-business ethicsshareholders' wealthemployee benefits( business ethics, shareholder wealth,employee benefits) and it is the best selection criterion. The -Select-smallerlargerCorrect 2 of Item 1 ( smaller,larger) the NPV, the more value the project adds; and added value means a -Select-higherlowerCorrect 3 of Item 1 ( higher,lower) stock price. In equation form, the NPV is defined as:

CFt is the expected cash flow at Time t, r is the project's risk-adjusted cost of capital, and N is its life, and cash outflows are treated as negative cash flows. The NPV calculation assumes that cash inflows can be reinvested at the project's risk-adjusted -Select-rd rs WACC(RD,RS,WACC).When the firm is considering independent projects, if the project's NPV exceeds zero the firm should -Select-acceptrejectCorrect 5 of Item 1 (accept, reject) the project. When the firm is considering mutually exclusive projects, the firm should accept the project with the -Select-lowest positivelowest negativehighest positivehighest negativeCorrect 6 of Item 1 NPV.

options ( lowest positive, lowest negative, highest positive, highest negative)