Greenwichplcisconsideringaddingtwonewproductsatasubsidiarytoimproveits overall competitiveness. The new products are enthusiastically supported by the managers responsible, and an immediate decision is required. It is normal for the managers to calculate the net present value (NPV) for the projects before it is accepted or rejected.

Detailsoftheproposals

	ProjectA	ProjectB
Capitalcost	750,000	750,000
Annualvolume	10,000units	6,944units
Lifeofproject	10years	10years

	Unit()	Unit()
Sellingprice	44	90
Costs:
Labor	12	13
Material	9	33
VariableOverhead	4	10
	25	56
Incrementalfixed costsforprojects	53,000	100,000

Thediscountrateis12%.CalculatetheNetPresentValueofthecashflowsfor Project A.