A project with an initial cost of $15,000 is expected to produce net cash flows of $8,000,

$9,000, $10,000, and $11,000 for each of the next 4 years. The firm’s cost of capital is 12 percent, but the financial manager perceives the risk of this particular project to be much higher than 12 percent. The financial manager feels that a 20 percent discount rate would be appropriate for the project.

(a) Compute the net present value of the project at the firm’s cost of capital.

(b) Compute the risk-adjusted net present value of the project.