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.

Risk index Required return

0 4.2(current risk-free rate)

1 4.7

2 5.2

3 5.7

4 6.2

5 6.7(current IRR)

6 7.2

7 7.7

8 8.2

9 8.7

10 9.2

The firm is analyzing two projects based on their RADRs.

Project Pita requires an initial investment of $12400 and is assigned a risk index of 7 . Project Grape Leaf requires an initial investment of $8300 and is assigned a risk index of 9. The two projects have -8 year lives. Pita is projected to generate cash inflows of $5900 per year. Grape Leaf is projected to generate cash inflows of $4900 per year. Use each project's RADR to select the better project.

The NPV for project Pita is $

The NPV for project greenleaf is $

Which project should Culinary Cafe choose