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?