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4. (Risk-adjusted NPV) The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of $10,000 and will operate for 8 years.
4. (Risk-adjusted NPV) The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of $10,000 and will operate for 8 years. Project A will produce expected cash flows of $6,000 per year for years 1 through 8, whereas project B will produce expected cash flows of $7,000 per year for years 1 through 8. Because project B is the riskier of the two projects, the management of Hokie Corporation has decided to apply a required rate of return of 19 percent to its evaluation but only a required rate of return 9 percent to project A. Determine each project's risk-adjusted net present value. What is the risk-adjusted NPV of project A? $ (Round to the nearest cent.) What is the risk-adjusted NPV of project B? $ (Round to the nearest cent.)
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