Net present value (NPV)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 Pheasant Pharmaceuticals 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:YearCash FlowYear 1$275,000Year 2$475,000Year 3$450,000Year 4$450,000Pheasant Pharmaceuticals’s weighted average cost of capital is
8%, and project Beta has the same risk as the...