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 E 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.) Data table (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 $175,000 Project 2 $307,000 Initial investment (CF) Year (t) 1 1 2 3 $80,000 65,000 61,000 65,000 55,000 Project Y $236,000 Cash inflows (CF) $55,000 68,000 76,000 88,000 90,000 $94,000 $ 94,000 94,000 94,000 94,000 4 5 5 Risk Class 1 II Risk Classes and RADRs Description Risk adjusted discount rate (RADR) Lowest risk 10.8% Below-average risk 13.6 Average risk 15.7 Above-average risk 19.6 Highest risk 22.4 IV V Print Done