Project A requires an original investment of $65,000. The project will yield cash flows of $15,000 per year for 7 years. Project B has a calculated net present value of $5,500 over a 5-year life. Project A could be sold at the end of 5 years for a price of $30,000.

Below is a table for the present value of $1 at compound interest.

Year		6%		10%		12%
1		0.943		0.909		0.893
2		0.890		0.826		0.797
3		0.840		0.751		0.712
4		0.792		0.683		0.636
5		0.747		0.621		0.567

Below is a table for the present value of an annuity of $1 at compound interest.

Year		6%		10%		12%
1		0.943		0.909		0.893
2		1.833		1.736		1.690
3		2.673		2.487		2.402
4		3.465		3.170		3.037
5		4.212		3.791		3.605

Use the tables above.

a. Determine the net present value of Project A over a 5- year life with salvage value assuming a minimum rate of return of 12%. $fill in the blank 1

b. Which project provides the greatest net present value?

Project AProject B