4. Net present value method McCall Enterprises is evaluating a proposed capital budgeting project that...
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4. Net present value method
McCall Enterprises is evaluating a proposed capital budgeting project that will require an initial investment of $132,000. The project is expected to generate the following net cash flows:
| Year | Cash Flow |
|---|---|
| 1 | $39,400 |
| 2 | $50,800 |
| 3 | $45,900 |
| 4 | $43,400 |
Assume the desired rate of return on a project of this type is 10%. The net present value of this project is
Suppose McCall Enterprises has enough capital to fund the project, and the project is not competing for funding with other projects. Should McCall Enterprises accept or reject this project?
Reject the project
Accept the project
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