Review Problem #$6$:

Your company is considering the following two projects. The board is concerned about the level of risk in both projects $-$ they have asked you to use the CE approach to adjust the expected NPV for each project. Which project should be accepted? The firm's cost of capital is $8\%$ and the risk$-$free rate is $1\%.$

$\backslash$table$[[$Year$,\backslash$table$[[$Expected NCF$],[$Project A$]],\backslash$table$[[$Expected NCF$],[$Project B$]],\backslash$table$[[$Certainty Equivalent Factor $($both$],[$projects$)]]],[0,$$$(10,000),$$$(10,000),1\mathrm{.}0],[1,10,000,7,000,0\mathrm{.}5],[2,7,000,12,000,0\mathrm{.}9],[3,10,000,7,000,0\mathrm{.}3]]$