Good old XYZcorp is considering two mutually exclusive projects, A & B in order to expand their product line. After letting the cost accountants out of their cages, it was determined that project A's initial investment must be $42,400, while project be will cost $60,000.

Project A has projected cash inflows of $25,000 per year for three years. Project B's inflows are more variable: $10,000 in year 1; $30,000 in year 2; and $40,000 in its final year.

You have determined the following:

The Prime is 7%, LIBOR is 6%. The firm's cost of capital is 12%.

Using NPV analysis, if the NPV for project B = + $1,320, which project do you prefer?