Greenwich plc is considering adding two new products at a subsidiary to improve its overall competitiveness. The new products are enthusiastically supported by the managers responsible and an immediate decision is required. It is normal for the managers to calculate the net present value (NPV) for the projects before it is accepted or rejected.

Details of the proposals

	Project A	Project B
Capital cost	750,000	750,000
Annual volume	10,000 units	6,944 units
Life of project	10 years	10 years

	Unit ()	Unit ()
Selling price	44	90
Costs:
Labour	12	13
Material	9	33
Variable Overhead	4	10
	25	56
Incremental fixed costs for projects	53,000	100,000

The discount rate is 12%. Calculate the Net Present Value of the cash flows for Project A.

1. 24,050.
2. 24,260.
3. 25,120.
4. 25,550