Cranjet Industries is expanding its product line and its production capacity. The costs and expected cash flows of the two independent projects are given in the following table. The firm uses a discount rate of 16.4 percent for such projects.

a. What are the NPVs of the two projects?

b. Should both projects be accepted? or either? or neither? Explain your reasoning.

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Product Line Expansion S(2,575,000) $600,000 $875,000 $875,000 $875,000 S875,000 Production Capacity Expansion S(8,137,250) S2,500,000 S2,500,000 S2,500,000 S3.250,000 S3,250,000 Year