16. (10 Points, show your work) Under Armour, Inc. is considering two potential investments. The probability distribution of annual end-of year cash flows for the respective projects are:

Project A Project B

Probabilityoutcomeprobability outcome

.25$20,000.25$24,000

.50$30,000 .50$30,000

.25$40,000.25$36,000

Both projects will require an initial outlay of $100,000 and will have an estimated life of 6 years. Project A is considered a riskier investment and will have a risk-adjusted required rate of return of 15%, while Project B's risk-adjusted required rate of return is 12%.

a)Determine the expected value of each project's annual cash flow.

Project A Project B

b)Determine cash project's risk-adjusted net present value.

Project AProject B