Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,500,000. The project is expected to generate the following net cash flows: Year Cash Flow
Year 1 $275,000
Year 2 $450,000
Year 3 $450,000
Year 4 $475,000
Cold Goose Metal Works Inc.'s weighted average cost of capital is 8%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?
a. -$878,204.
b. -$1,153,204.
c. -$678,204.
d. $1,346,796.
Cold Goose Metal Works Inc.'s decision to accept or reject project Beta is indenpendent of its decisions on other projects. IF the firm follows the NPV method, it should project Beta?a. acceptb. reject

-$1,153,204.

reject

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Cash flow in year 0 = $-2,500,000

Cash flow in Year 1 = $275,000

Cash flow in Year 2 = $450,000

Cash flow in Year 3 = $450,000

Cash flow in Year 4 = $475,000

I = 8%

NPV = -$1,153,204.

Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.  

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

you can put this in your 11 sentence summary

" most of the money would be invested in innovation, economic convergence."

answer; to open a new transaction, the user should type the code/0 along with a new transaction code, when done with that the user should press enter to open the transaction; good luck;