The net present value (NPV) method estimates how much a potential project will contribute to (Select: business ethics, shareholders' wealth, OR employee benefits) Correct 1 of Item 1, and it is the best selection criterion. The (Select: smaller OR larger) the NPV, the more value the project adds; and added value means a (Select: higher or lower) stock price.

CF_t 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 or WACC). When the firm is considering independent projects, if the project's NPV exceeds zero the firm should (Select: accept or reject) the project. When the firm is considering mutually exclusive projects, the firm should accept the project with the (Select: lowest positive, lowest negative, highest positive, highest negative) NPV.