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5 (Risk-adjusted NPV) The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of $15,000 and will operate for 6 years,
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(Risk-adjusted NPV) The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of $15,000 and will operate for 6 years, Project A will produce expected cash flows of $6,000 per year for years through 6, whereas project will produce expected cash flows of $7,000 per year for years 1 through 6. Because project B is the riskler of the two projects, the management of Hokie Corporation has decided to apply a required rate of return of 18 percent tots evaluation but only a required rate of retum 12 percent to project A. Determine each project's risk-adjusted not present value What is the risk-adjusted NPV of project A? $(Round to the nearest cont.) What is the risk-adjusted NPV of project B? (Round to the nearest cent.) Step by Step Solution
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