The Radford Company is faced with two mutually exclusive investment projects. Each costs $10,000 and each has an expected life of three years. Annual net cash flows from each project begin one year after the initial investment is made and have the following probability distribution.

Project A: Probability .3 .5 .2 Cash Flows 5,000 6,000 7,000

Project B: Probability .25 .6 .15 Cash Flows 2,000 5,000 8,000

The Radford company evalutes project A at 10% and project B at 12%

A. Compute the expected annual cash flow.

Project A ___ Project B___

B. What are the expected NPV and IRR of each project

Project A: NPV___ IRR____ Project B: NPV_____ IRR____