Consider the following two projects:

Initial Outlay Net Cash Flow Each Period

1 2 3 4

Project A $4,000 $2,003 $2,003 $2,003 $2,003

Project B $4,000 $10,736

A. Calculate the net present value of each of the above projects, assuming a 14 percent discount rate.

B. If 14 Percent is the required rate of return for these projects, which project is preferred? Why?