Country Wallpapers is considering investing in one of three mutually exclusive projects, E, F, and G. The firm's cost of capital, r, is 15.4 %, and the risk-free rate, R_F, is 9.6 %. The firm has gathered the following basic cash flow and risk index data for each project

	Project (j)
	E	F	G
Initial Investment (CF0)	$15,000	$11,000	$18,000
Year	Cash Inflows (CFt)
1	$5,500	$6,500	$3,900
2	5,500	3,900	6,200
3	5,500	5,200	7,500
4	5,500	2,500	12,900
Risk Index (RIj)	1.77	1.04	0.56

Find the net present value (NPV) of each project using the firm's cost of capital.

The net present value for project E is $.

(Round to two decimal places.)

The net present value for project F is $.

(Round to two decimal places.)

The net present value for project G is $.

(Round to two decimal places.)

Which project is preferred in this situation? Project

(enter 'E', 'G', or 'F'), with the highest NPV, is preferred.

b. The firm uses the following equation to determine the risk-adjusted discount rate, RADR_j, for each project j:

RADR_j = R_F + RI_j x (r - R_F)

where R_F = risk-free rate of return, RI_j = risk index for project j, and r = cost of capital.

The RADR for project E is

%. (Round to two decimal places.)

The RADR for project F is

%. (Round to two decimal places.)

The RADR for project G is

%. (Round to two decimal places.)

c. Use the RADR for each project to determine its risk-adjusted NPV. (Hint: Make sure to enter negative signs where appropriate).

The risk-adjusted net present value for project E is $.

(Round to two decimal places .)

The risk-adjusted net present value for project F is $.

(Round to two decimal places.)

The risk-adjusted net present value for project G is $.

(Round to two decimal places.)

Which project is preferable in this situation? Project

(enter 'E', 'F', or 'G') will be preferable.