Evaluating a proposed capital budgeting project

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Reference no: EM13913118

Suppose Cold Goose Metal Works Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,225,000.

The project is expected to generate the following net cash flows:

Year Cash Flow

Year 1 $350,000

Year 2 $450,000

Year 3 $425,000

Year 4 $500,000

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?

Should you reject or accept beta?

Reference no: EM13913118

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