Moses Manufacturing is attempting to select the best of three mutually exclusive projects, X, Y, and Z. Although all the projects have 5-year lives, they possess differing degrees of risk. Project X is in class V, the highest-risk class; project Y is in class II, the below-average-risk class; and project Z is in class III, the average-risk class. The basic cash flow data for each project and the risk classes and risk-adjusted discount rates (RADRs) used by the firm are shown in the following tables.

a. Find the risk-adjusted NPV for each project.
b. Which project, if any, would you recommend that the firmundertake?

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ProjtX ProjectY Initial investment (CFo) S180,000 235,000 Project Z $310,000 Cash inflows (CF,) car $80,000 70,000 60,000 60,000 60,000 $50,000 60,000 70,000 80,000 90,000 $90,000 90,000 90,000 90,000 90,000 4 Risk Classes and RADR Risk-adjusted discount rate (RADR) Description Lowest risk Below-average risk Average risk Above-average risk Highest risk Risk class 10% 13 15 19 IV