$177,000 $238,000 $311,000 Initial investment (CF) Year (t) $82,000 68,000 55,000 58,000 60,000 Cash inflows (CF) $53,000 70,000 72,000 88,000 94,000 $94,000 94,000 94,000 94,000 94,000 Risk Class Risk Classes and RADRS Description Risk adjusted discount rate (RADR) Lowest risk 10.4% Below-average risk 13.5 Average risk 15.4 Above-average risk 19.2 Highest risk 22.3 Risk classes and RADR Moses Manufacturing is attempting to select the best of three mutually exclusive projects, X, Y, and Z. Although all the projects have 5-year lives, they possess differing degrees of risk. Project X is in class V, the highest-risk class, project Y is in class II, the below-average-risk class, and project Z is in class III, the average-risk class. The basic cash flow data for each project and the risk classes and risk-adjusted discount rates (RADRs) used by the firm are shown in the following tables : a. Find the risk-adjusted NPV for each project. b. Which project, if any, would you recommend that the firm undertake? Data Table . Project X $177,000 Project Z $311,000 Initial investment (CF) Year (t) $82,000 68,000 55,000 58,000 60,000 Project Y $238,000 Cash inflows (CFt) $53,000 70,000 72,000 88,000 94,000 $94,000 94,000 94,000 94,000 94,000