A company has to choose between two different investments.

Investment A: This investment requires an immediate outlay of $60,000 and another Investment of $40,000 in year 3. The investment will return annual profits of $40,000 from year 2 to year 8. At the end of year 8, the investment has a residual valua of $10,000.

Investment B: This investment requires an immediate outlay of $35,000 and additional investment of $15,000 per year from year 1 to year 3. The investment will return annual profits of $28,000 from year 4 to year 8. At the end of year 8, the investment has a residual value of $25,000.

The cost of capital is 8.5%.

a. Calculate the NPV for Investment A.

b. Calculate the NPV for Investment B.

Solve using financial calculator.