A company s considering a project which requires the initial outlay of $300,000 which includes both an after-tax salvage from the old asset of $12,000 and an additional working capital investment of $8,000. The 12-year project is expected to generate annual incremental cash flows of $54,000 and have an expected terminal value at the end of the project of $20,000. The cost of capital is 15 percent, and the company's marginal tax rate is 40 percent. Calculate the net present value of this project.

• -$3,548.43
• $68,781.83
• -$6,544.56
• -$596,451.57
• $12,713.43

Sue is trying to determine which of two projects to undertake. Both projects have equal initial outlay. Project A has an NPV of $4,392.15, an IRR of 11.33%, and an EAA of $1,158.64. Project B has an NPV of $5,833.73, an IRR of 9.88%, and an EAA of $1,093.50. The cost of capital for both projects is 9%, the projects have different lives, and the projects are repeatable. What should Sue do?

• You should do neither project because neither of them would add value to your company.
• You should do Project Adam because it has a higher IRR.
• You should do Project Adam because it has a higher EAA.
• You should do both projects because both have positive NPVs.
• You should do Project Eve because it has a higher NPV.