Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both products is 14 percent.

Project A:Nagano NP-30.Professional clubs that will take an initial investment of $580,000 at Time 0.Next five years (Years 1-5) of sales will generate a consistent cash flow of $215,000 per year.Introduction of new product at Year 6 will terminate further cash flows from this project.

Project B:Nagano NX-20.High-end amateur clubs that will take an initial investment of $440,000 at Time 0.Cash flow at Year 1 is $130,000. In each subsequent year cash flow will grow at 10 percent per year.

Introduction of new product at Year 6 will terminate further cash flows from this project.