Project Alpha offers the following net cash flows following an initial (year 0), certain outlay (NINV) of $70,000:

Year Net Cash Flow Certainty Equivalent Factor 1 $30,000 0.91 2 30,000 0.79 3 30,000 0.65 4 20,000 0.52 5 20,000 0.40 6 10,000 0.30

a. Compute the NPV of this project at a 17 percent cost of capital.

b. If the risk-free rate is 8 percent, what is the certainty equivalent NPV for Project Alpha? Q-698