HW19-6)

Silver Sun Packaging has a weighted-average cost of capital of 8.39 percent and is evaluating two projects: A and B. Project A involves an initial investment of 5,790 dollars and an expected cash flow of 10,480 dollars in 6 years. Project A is considered more risky than an average-risk project at Silver Sun Packaging, such that the appropriate discount rate for it is 1.66 percentage points different than the discount rate used for an average-risk project at Silver Sun Packaging. The internal rate of return for project A is 10.39 percent. Project B involves an initial investment of 4,683 dollars and an expected cash flow of 6,744 dollars in 5 years. Project B is considered less risky than an average-risk project at Silver Sun Packaging, such that the appropriate discount rate for it is 1.38 percentage points different than the discount rate used for an average-risk project at Silver Sun Packaging. The internal rate of return for project B is 7.57 percent. What is X if X equals the NPV of project A plus the NPV of project B?