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The Butler-Perkins Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $6,750 and has an expected life of 3 years. Annual

The Butler-Perkins Company (BPC) must decide between two mutually exclusive investment

projects. Each project costs $6,750 and has an expected life of 3 years. Annual net cash flows from each project begin 1 year after the initial investment is made and have the following probability distributions:

Project A

Project B

Probability

Net Cash Flows

Probability

Net Cash Flows

.2

6,000

.2

0

.6

6,750

.6

6,750

.2

7,500

.2

18,000

BPC has decided to evaluate the riskier project at a 12 percent rate and the less risky project at a 10 percent rate.(Project B is the riskier one, and A is less).

Required

What is the risk-adjusted NPV of each project?

(I have already know the answer is: NPVA = $10036.25 ; NPVB = $11624.01. I need to know how to calculate it. Please, Do not copy the old answer.)

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