Determine each project risk-adjusted net present value

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Reference no: EM131977000

(Risk-adjusted NPV) The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of $10,000 and will operate for 9 years. Project A will produce expected cash flows of $4,000 per year for years 1 through 9, whereas project B will produce expected cash flows of $5,000 per year for years 1 through 9 . 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 18 percent to its evaluation but only a required rate of return 7 percent to project

A. Determine each project's risk-adjusted net present value. What is the risk-adjusted NPV of project A?

Reference no: EM131977000

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