Question

​(​Risk-adjusted NPV​)  The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of ​$10 comma 000 and will operate for 5 years. Project A will produce expected cash flows of ​$5 comma 000 per year for years 1 through 5​, whereas project B will produce expected cash flows of ​$6 comma 000 per year for years 1 through 5. Because project B is the riskier of the two​ projects, the management of Hokie Corporation has decided to apply a required rate of return of 15 percent to its evaluation but only a required rate of return 12 percent to project A. Determine each​ project's risk-adjusted net present value. What is the​ risk-adjusted NPV of project​ A? nothing  ​(Round to the nearest​ cent.) What is the​ risk-adjusted NPV of project​ B? nothing  ​(Round to the nearest​ cent.)

Answer 1