( Risk - adjusted discount rates and risk classes ) The G. Wolfe Corporation is examining two capital - budgeting projects with 5 - year lives . The first , project A , is a replacement project ; the second , project B , is a project unrelated to current operations . The G. Wolfe Corporation uses the risk - adjusted discount rate method and groups projects according to purpose , and then it uses a required rate of return or discount rate that has been preassigned to that purpose or risk class . The expected cash flows for these projects are given in the popup window , The purpose / risk classes and preassigned required rates of return are shown in the popup window , Determine each project's risk - adjusted net present value .

A. What is the risk-adjusted NPV of project A

B. What is the risk-adjusted NPV of project B

PROJECT A - $260,000 PROJECT B - $380,000 Initial investment Cash inflows: Year 1 Year 2 Year 3 Year 4 Year 5 $120,000 20,000 50,000 70,000 100,000 $150,000 150,000 150,000 150,000 150,000 PURPOSE Replacement decision Modification or expansion of existing product line Project unrelated to current operations Research and development operations REQUIRED RATE OF RETURN 11% 15% 16% 20%