ZuoTi.Pro
Question

You calculate the net present value (NPV) for a project your firm is considering. Using a...

You calculate the net present value (NPV) for a project your firm is considering. Using a 12% discount rate, the NPV is $600,000. The cost of the project is $1,200,000. What decision do you make?

Group of answer choices

Reject because the NPV is less than the cost of the project.

Accept because $600,000 divided by $1,200,000 is 50%, which is greater than the discount rate.

None of these are correct.

Reject because the NPV should be negative.

Accept because the NPV is greater than $0.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

NPV refers to Net Present Value. It shows the present value of excess amount that the project will generate over and above of its initial cost. The higher NPV is, the better it is for the company. If the project is having a NPV which is positive, which means it is not in negative, the the project shall be selected. Therefore, under this case, correct option is 'Accept because the NPV is greater than $0'.

0 0
Add a comment
Know the answer?
Add Answer to:
You calculate the net present value (NPV) for a project your firm is considering. Using a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You calculate the net present value (NPV) for a project your firm is considering. Using a...

    You calculate the net present value (NPV) for a project your firm is considering. Using a 12% discount rate, the NPV is $600,000. The cost of the project is $1,200,000. What decision do you make? Group of answer choices Accept because the NPV is greater than $0. Reject because the NPV should be negative. None of these are correct. Reject because the NPV is less than the cost of the project. Accept because $600,000 divided by $1,200,000 is 50%, which...

  • 1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...

    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 Cute Camel Woodcraft Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $375,000 Year 2 $450,000...

  • 1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...

    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 Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $3,000,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 Year 2 $325,000 $450,000 $425,000...

  • The net present value (NPV) rule is considered one of the most common and preferred criteria...

    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 Alpha) that will require an initial investment of $500,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $350,000 Year 2 $425,000 Year 3 $425,000 Year 4 $400,000 Happy Dog Soap Company’s weighted average...

  • Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one...

    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 Celestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $400,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 Year 2 $375,000 $425,000 $500,000 Year 3 Year 4 $400,000...

  • The net present value (NPV) rule is considered one of the most common and preferred criteria...

    The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider the case of Hungry Whale Electronics: Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $400,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $300,000 Year 2 $425,000 Year 3 $475,000 Year 4 $425,000 The company’s weighted...

  • The net present value (NPV) rule is considered one of the most common and preferred criteria...

    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 Green Caterpillar Garden Supplies Inc. is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $500,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $325,000 Year 2 $475,000 Year 3 $450,000 Year 4 $425,000 Green Caterpillar Garden Supplies Inc.’s...

  • Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one...

    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 Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial Investment of $500,000. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4 Cash Flow $350,000 475,000 400,000 475,000...

  • 1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...

    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 Cute Camel Woodcraft Company is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $600,000. The project is expected to generate the following net cash flows: Cash Flow Year Year 1 $300,000 $500,000 $425,000 $475,000...

  • 1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value...

    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 Lumbering Ox Truckmakers is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $3,000,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $375,000 Year 2 $400,000 Year...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT