Question: Consider the following cash flows on two mutually exclusive projects: YearProject AProject B0$47,000$63,000122,00016,000216,00028,000316,00025,300 Cash flows of project A are expressed in real terms, while those

Consider the following cash flows on two mutually exclusive projects:

YearProject AProject B0$47,000$63,000122,00016,000216,00028,000316,00025,300

Cash flows of project A are expressed in real terms, while those of project B are expressed in nominal terms. The appropriate nominal discount rate is 9 percent, and inflation is 2.5percent.

a.Calculate theNPV for each project?(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round the answers to 2 decimal places.)

NPVProject A$Project B$

b.Which project should you choose?multiple choice

Project A

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