Question: Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 $ 69,000 $ 84,000 1 49,000 48,000 2 44,000

Consider the following cash flows on two mutually exclusive projects:

Year	Project A		Project B
0	$	69,000	$	84,000
1		49,000		48,000
2		44,000		57,000
3		39,000		60,000

The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 12 percent and the inflation rate is 4 percent.

Calculate the NPV for each project.

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