Charley & Waldo's World of Wonder is a science-oriented children's

museum. The museum has a "free" section where children have

unlimited use science oriented exhibits and a premium section where

children (or their parents) pay on a per exhibit basis. For example one

of the premium exhibits is a narrated demonstration of "Tesla Balls".

Revenue earned on premium exhibits is tracked separately for each

exhibit. Charley and Waldo are considering expanding their premium

area and are looking at adding a new exhibit. They plan to only add one

new exhibit. After viewing a number of ideas suggested by high school

science teachers and children psychologists, they have narrowed the

list down to two alternatives. The investment required and the

anticipated free cash flow for each alternative is shown in the table

below. Zip is a demonstration of friction and air resistance; and Catch

Air is an inverted wind tunnel that allows children to float in air as if they

are flying. If Charley and Waldo believe that the NPV technique is the

best in terms of selecting capital projects, which

project

should they

pick. In answering this question assume that the cost of capital is 6.5%.