I No Spach... Heading 1 Heading 2 The Subtitle c) Somas ECOSE DA NPV CG NPV Project compared the results) (15 marks) VII KORONA Manufacturing is considering investing in either of two mutually exclusive projects, A and B. The firm has a 14 percent cost of capital, and the risk free rate is currently 9 percent. The initial investment, expected cash inflows, and certainty equivalent factors associated with each of the projects are shown in the following table Initial investment (IT) Cash inflows equivalent Year (1) Project A $ 40,000 Certainty Cash inflows equivalent factors (CF) (Q.) $20,000 0.90 16,000 0.80 12,000 0.60 10,000 0.50 10,000 0.40 Project B $ 56,000 Certainty (CF) factors (0) $20,000 0.95 25,000 0.90 15.000 0.85 20,000 0.80 10 000 0.80 a) Find the net present value (unadjusted for risk) for each project. b) Find the certainty equivalent net present value for each project c) Compare and discuss your findings in a) and b) above. Which, if either of the projects do you recommend that the firm accept? Explain. (marks 20)