1 Sheila Goodman recently received her MBA from the Harvard Business School. She has joined the family business, Goodman Software Products Inc., as Vice-President of Finance. She believes in adjusting projects for risk. Her father is somewhat skeptical but agrees to go along with her. Her approach is somewhat different than the risk-adjusted discount rate approach, but achieves the same objective. She suggests that the inflows for each year of a project be adjusted downward for lack of certainty and then be discounted back at a risk-free rate. The theory is that the adjustment penalty makes the inflows the equivalent of riskless inflows, and therefore a risk-free rate is justified A table showing the possible coefficient of variation for an inflow and the associated adjustment factor is shown next: Coefficient of Adjustment Factor 90 80 70 60 50 0-25 26-50 51-75 76 1.00 1.01 125 Assume a $165,000 project provides the following inflows with the associated coefficients of variation for each year. Coefficient of Year Inflow $30,600 56,100 73,800 61,700 67,700 Variation 24 48 85 4 1.11 Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Fill in the table below: (Do not round intermediate calculations. Round your dollar answers to the nearest whole dollar.) Year Adjustment Factor Adjusted Inflovw b-1. If the risk-free rate is 6 percent, compute the net present value of the adjusted inflows. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value