Comfy Home is considering one of two mutually exclusive investments. Comfy Home's cost of capital is 10%. Please ignore the effects of taxes.

Project A: Comfy Home will purchase a specialized candle mold machine that will allow it to create candles in custom shapes and sizes. Comfy Home will pay $40,000 for the machine and place it in service on 12/31/2021. The machine will be depreciated straight-line over its 10-year useful life. Comfy Home expects the machine to generate net cash flows of $14,000 every year for 5 years.

Project B: Comfy Home will purchase a patent for several perfumes it will use in its candles. It will pay $40,000 for the rights on 12/31/2021. The patent will be amortized straight-line over its useful life of 9 years. Comfy Home expects the patent to generate net cash flows of $10,000 for 9 years.

Question 1: What would be the NPV of Project B?

Question 2: Which of the following statements is most true about these two projects?

--Comfy Home should invest in Project B

--Comfy Home should invest in Project A