Like most firms in its industry, Culinary Cafe uses a subjective risk assessment tool of its own design. The tool is a simple index by which projects are ranked by level of perceived risk on a scale of 0-10. The scale is recreated in the following table.

The firm is analyzing two projects based on their RADRs. Project Pita requires an initial investment of $12,800 and is assigned a risk index of 7. Project Grape Leaf requires an initial investment of $8,400 and is assigned a risk index of 8. The two projects have 7-year lives. Pita is projected to generate cash inflows of $5,600 per year. Grape Leaf is projected to generate cash inflows of $4,200 per year. Use each project's RADR to select the better project.

a.) The NPV for project Pita is $______ (Round to the nearest cent)

b.) The NPV for project Grape Leaf is $_______ (Round to the nearest cent)

c.) Which project should Culinary Cafe choose?

Required return 3.9% (current risk-free rate) Risk index 4.5 1 5.1 5.7 6.3 6.9 (current IRR) 7.5 8.1 8.7 9.3 10 9.9 345 O70O