11-5A. (Risk-adjusted discount rates and risk classes) The G. Wolfe Corporation is examining two capital-budgeting projects with five-year lives. The first, project A, is a replacement project; the second, project B, is a project um-elated to current operations. The G. Wolfe Corporation uses the risk-adjusted discount rate method and gTOUpS projects according to purpose and then 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 as follows:

The purpose or risk classes and preassigned required rates of return are as follows:

Determine the project's risk-adjusted net present value.

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PROJECT A PROJECT B Initial Investment: Cash Inflows: $250,000 $400,000 Year 1 $ 30,000 $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