Assume a firm is considering to invest and it has estimated the cash outflows (costs) and cash inflows of the underlined projects as follows. The projects have a five year life.

yearProject A cash flowsProject B cash flows

0($8,000)($8,000)

112,6250

205,000

315,6250

400

5100,625130,000

Task: If the required rate of return on these projects is 8%, which project would be acceptable and why?Base your decision on NPV calculations.