ACME Mining is considering two capital projects. Project A $($five$-$year horizon$),$ considered to be high risk, is expanding capacity for exploration at a cost of

$$1,200,000,$ with the expectation of before$-$tax operating cash flows of $$400,000$ per year for five years. The required capital assets have a five$-$year life

and a terminal disposal value of zero. The capital assets are disposed at the end of their useful life within the fifth tax year.

Project B $($four$-$year horizon$),$ considered to be low risk, is expanding production at a cost of $$1,000,000,$ with the expectation of before$-$tax operating cash

flows of $$400,000$ per year for four years. The required capital assets have a four$-$year life and a terminal disposal value of zero. The capital assets are

disposed at the end of their useful life within the fourth tax year.

ACME Mining has a marginal tax rate of $20\%$ and the equipment for both capital projects qualifies for a CCA rate of $30\%.$ The after$-$tax required rate of

return for all projects is $10\%.$

For Project A$,$ show the following after$-$tax discounted cash flows at the initial date $($when the decision is made$)$ corresponding to the following. Do not

forget to use negative signs for cash outflows.

The initial investment $

The increase in tax shield $

The recurring operating cash flows for the five years of the project $($in total$)$

Calculate the NPV of project A: $

For Project B$,$ show the following after$-$tax discounted cash flows at the initial date $($when the decision is made$)$ corresponding to the

following.Do not forget

to use negative signs for cash outflows.

The initial investment $

The increase in tax shield $

The recurring operating cash flows for the four years of the project $($in total$)$

Calculate the NPV of project B: $