P11-28 (similar to) * Question Help Risk classes and RADR 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 : Data Table a. Find the risk-adjusted NPV for each project. b. Which project, if any, would you recommend that the firm undertake? a. The net present value for project X is $(Round to the nearest cent (Click on the icon here e in order to copy the contents of the data table below into a spreadsheet.) Project X $182,000 Project 2 $308,000 Initial investment (CF) Year (t) Project Y $237,000 Cash inflows (CF) $52,000 63,000 79,000 89,000 98,000 $80,000 65,000 63,000 59,000 57,000 2 3 4 5 $85,000 85,000 85,000 85,000 85,000 Risk Class Enter your answer in the answer box and then click Check Answer. II Risk Classes and RADRs Description Risk adjusted discount rate (RADR) Lowest risk 10.3% Below-average risk 13.4 Average risk 15.6 Above-average risk 19.4 Highest risk parts remaining IV V 22.5 Check