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All the firms cash inflows have already been adjusted for taxes.
a.	Evaluate the projects using risk-adjusted discount rates.
b.	Discuss your findings in part a, and recommend the preferred project.
Solution
a.	Evaluate the projects using risk-adjusted discount rates.
	Project A
	Initial investment		-$ 20,000
	Project life (years)		5
	Annual cash inflow		$ 7,000
	Required return		8%
	PV of cash inflows
	NPV
	Project B
	Initial investment		-$ 30,000
	Project life (years)		5
	Annual cash inflow		$ 10,000
	Required return		14%
	PV of cash inflows
	NPV