Arden Bowling Company produces bowling alley equipment and is currently evaluating two muruaily exclusively projects.

Project A:

Project $A$ is a $5-$year project which involves the production of a unique type of bowling ball. The project requires an imitial investment in a phant estimaied $10$ cost $$12$ million. The plant will take $2$ years to construct and the contructor building the plant requires talf of the cost be paid for at the end of year i with the remainder to be paid at the end of year $2.$ The plint will be depieciated on a straight$-$line basis over $5$ years. The land to construct tie plant on will be fully recovered when opentions cease. Production equipmeni will cost $$6,00,000$ io be paid in exsh an the time production begins and be deprecated ove $5-$years using the staight$-$line method. The plam could be sold for in estimaled $$750,000$ and the equipment sold for $$45,000.$ Estimated requires a $12$ percent rate of retim for a project of this type of risk

Pr$$cet B:

Project B is a $5.$yea project which involves the production of bowiting pits. The project requires an initial investment in a plant estimaled ro cost $$$50,000.$ The plant will take $2$ years to construct and the contractot building the plant requires balf of the cost be paid for at the end of year I with the remainder to be pard at the end of year $2.$ The plant will be depreciated on a stright$-$line basis over $5$ years. The land to construct the plant on will cost $510,000$ and be recovered when opernions cease. Production equipment wili cost $$350,000$ to be paid in cash an the time production begins and be

The cash Doows fequired for Project $A$ at $t-0,t-1,$ and $i-2$ respectively are

$=-5457,000,-5600,000,-51,200,000$

$=-5457,000,-5600,000,-51220,000$