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valuating 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. Eonsider the case of Black Sheep Broadcasting Company: suppose Black Sheep Broadcasting Company is evaluating a proposed capital budgeting project (project Apha) that wil require an initial investment of $400,000. The project is expected to generate the following net cash flows: The company's weighted average cost of capital is 7 th, and project Alpha has the same risk as the firm's awerage project, Based on the cash flows. What is project Aphas net present value (NPV)? $1,105,577 $921.314 81,059,511 31,371,314 Making the accept or reject decision Bisck sheep Broadcasting Companys deasion to accept ar reject proyect Aphis is independent of its deasions an other projects. If the hrikitollows the Black Sheep Broadcasting 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 Apha. Which of the following statements best explains what it means when a project has an NPV of 50 ? When a project has an NPV of $0, the project is earning a profit of $0. A firm should reject any project with an NPV of s0, because the project is not profitable. When a project has an NPV of \$0, the project is eaming a rate of return less than the project's weighted avernge 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 50 , the project is earning 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 $0, because the project is earning the required minimum rate of return

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