The G. Wolfe Corporation is examining two capital-budgeting projects with 5- year lives. The first, project A, is a replacement project; the second, project B, is a project unrelated to current operations.

The G. Wolfe Corporation uses the risk-adjusted discount rate method and groups projects according to purpose, and then it uses a required rate of return or discount rate that has been preassigned to that purpose or risk class. The expected cash flows for these projects are given here:The purpose/risk classes and preassigned required rates of return are as follows:

Determine each project’s risk-adjusted net present value.

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PROJECT A PROJECT B Initial investment $250,000 Cash inflows: Year 1 $400,000 $130,000 $135,000 Year 2 40,000 135,000 Year 3 50,000 135,000 Year 4 90,000 135,000 Year 5 130,000 135,000