The G. Wolfe Corporation is examining two capital- budgeting projects with 5-year lives. The first, project A, is a replacement project; the second, project B, is a project unrelated to current operations. The G. Wolfe Corporation uses the risk-adjusted discount rate method and groups projects according to purpose, and then it uses a required rate of return or discount rate that has been preassigned to that purpose or risk class. The expected cash flows for these projects are given here:

PROJECT A

Initial Investment -200,000

Cash inflows:

Year 1 - $120,000

Year 2 - $ 30,000

Year 3 - $ 40,000

Year 4 - $ 90,000

Year 5 - $100,000

Project B

Initial Investment -$340,000

Cash Flows

Year 1 - $150,000

Year 2 - $150,000

Year 3 - $150,000

Year 4 - $150,000

Year 5 - $150,000

The purpose/risk classes and preassigned required rates of return are as follows:

PURPOSE REQUIRED RATE OF RETURN

Replacement decision 11%

Modification or expansion of existing product line 15%

Project unrelated to current operations 17%

Research and development operations 20%

Determine each projects risk-adjusted net present value.