Project 1 requires an original investment of $12,000. The project will yield cash flows of $4,000 per year for seven years. Project 2 has a calculated net present value of $6,500 over a four-year life. Project 1 could be sold at the end of four years for a price of $14,500. 

(a) Determine the net present value of Project 1 over a four-year life with residual value, assuming a minimum rate of return of 20%. 

(b) Which project provides the greatest net present value?