d. Compare and discuss your findings in parts

(a)

and

(c).

Which project do you recommend that the firm accept? (Select from the drop-down menu.) (E,F,G)

After adjusting the discount rate, even though all projects are still acceptable, the ranking changes. Project

has the highest risk-adjusted NPV and should be chosen.

Risk-adjusted discount ratesBasic Country Wallpapers is considering investing in one of three mutually exclusive projects, E. F. and G. The firm's cost of capital, r, is 14.5%, and the risk-free rate. Rp.is 10.1%. The firm has gathered the following basic cash flow and risk index data for each project a. Find the net present value (NPV) of each project using the firm's cost of capital. Which project is preferred in this situation? b. The firm uses the following equation to determine the risk-adjusted discount rate, RADR, for each project j: RADR; -RE+RI,(r-RF) where R= = risk-free rate of return, RI; = risk index for project j. and r = cost of capital. c. Use the RADR for each project to determine its risk-adjusted NPV. Which project is preferable in this situation? d. Compare and discuss your findings in parts (a) and (c). Which project do you recommend that the firm accept? a. Find the net present value (NPV) of each project using the firm's cost of capital * Data Table The net present value for project E is (Round to the nearest cent.) The net present value for project Fiss (Round to the nearest cent.) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) The net present value for project G is S. (Round to the nearest cent.) Project (i) E F Which project is preferred in this situation? (Select from the drop-down menu.) Initial investment (CFO) $14,300 S11,000 $18,600 Project Cash inflows (CF) . with the highest NPV, is preferred. Year (!) 1 $6,500 $8,400 $3,500 2 6.500 4,400 5.700 b. The firm uses the following equation to determine the risk-adjusted discount rate, RADR;. for each projectj 3 6,500 5,500 7.500 6.500 2.500 12,600 RADR; = RE+Rl; (r-RF) Risk index (R) 1.78 0.99 0.50 where RF = risk-free rate of return, Rl; = risk index for project and r = cost of capital Print Done The RADR for project is %. (Round to two decimal places. G 4 The RADR for project is %. (Round to two decimal places.) The RADR for project Fis%. (Round to two decimal places.) The RADR for project is % (Round to two decimal places.) c. Use the RADR for each project to determine its risk-adjusted NPV. The risk-adjusted net present value for project is $. (Round to the nearest cent.) The risk-adjusted net present value for project Fiss (Round to the nearest cent.) The risk-adjusted net present value for project G is $ (Round to the nearest cent.) Which project is preferable in this situation? (Select from the drop-down menu.) Project will be preferable