Moses Manufacturing is attempting to select the best of three mutually exclusive projects, X, Y, and Z. Although all the projects have 5-year lives, they possess differing degrees of risk. Project X is in class V, the highest-risk class; project Y is in class II, the below-average-risk class; and project Z is in class III, the average-risk class. The basic cash flow data for each project and the risk classes and risk-adjusted discount rates (RADRs) used by the firm are shown in the following tables.

a. Find the risk-adjusted NPV for each project.

b. Which project, if any, would you recommend that the firm undertake?

(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)

	Project X	Project Y	Project Z
Initial investment (CF 0CF0)	$184 comma 000184,000	$231 comma 000231,000	$315 comma 000315,000
Year (tt )	Cash inflows (CF Subscript tCFt)
1	$85 comma 00085,000	$59 comma 00059,000	$87 comma 00087,000
2	69 comma 00069,000	68 comma 00068,000	87 comma 00087,000
3	61 comma 00061,000	73 comma 00073,000	87 comma 00087,000
4	62 comma 00062,000	87 comma 00087,000	87 comma 00087,000
5	64 comma 00064,000	95 comma 00095,000	87 comma 00087,000

Risk Classes and RADRs
Risk Class	Description	Risk adjusted discount rate (RADR)
I	Lowest risk	10.8 %10.8%
II	Below-average risk	13.613.6
III	Average risk	15.415.4
IV	Above-average risk	19.619.6
V	Highest risk	22.422.4