Consider the following cash flows on two mutually exclusive projects:

Year Project A Project B

0 -$51,000 -$66,000

1 31,000 30,000

2 26,000 39,000

3 21,000 42,000

The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 14 percent and the inflation rate is 5 percent.

Calculate the NPV for each project.(Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

NPV

Project A . $

Project B $

Which project should you choose?

Project A

Project B