=+A15-5 You are considering an investment of $300,000 in either Project A or Project B for West Coast Analyze cash flows Studios Inc. In discussing the two projects with an advisor, you decided that, for the risk involved, an average rate ofreturn of 12% on the cash investment would be required. For this purpose, you estimated the following economic factors for the projects:

Project A Project B Useful life 4 years 4 years Residual value 0 0 Net income:

Year 1 $ 80,000 $ 40,000 2 65,000 55,000 3 55,000 73,000 4 40,000 79,200

$240,000 $247,200 Capital Investment Analysis 605 Project A Project B Net cash flows:

Year 1 $155,000 $115,000 2 140,000 130,000 3 130,000 148,000 4 115,000 154,200

$540,000 $547,200