Pedro Spier, the president of Spier Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of three years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $116,000 and for Project B are $38,000. The annual expected cash inflows are $45,826 for Project A and $16,368 for Project B. Both investments are expected to provide cash flow benefits for the next three years. Spier Enterprises cost of capital is 8 percent.

Required

a-1.

Compute the net present value of each project. (Round your final answers to 2 decimal places.)

	Net Present Value
Project A
Project B

a-2.	Which project should be adopted based on the net present value approach?
	multiple choice 1 Project B Project A

b-1.

Compute the approximate internal rate of return of each project.

	Internal Rate of Return
Project A		%
Project B		%