Your boss asks you to analyze two mutually exclusive projects. With different risks, cach project has its

own discount rate: 12% for project A and 10% for project B.

Project A has the following cash flows: initial investment in year 0: $-1,000; additional investment in

year 1: $-224; positive CF: year 2: $498; vear 3: $628; vear 4: $749.

Project B has an initial investment of $-1,800 followed by perpetual cash flows of $140 per year, growing

at a constant rate of 3%.

Remember that only one project can be approved, if any, and use NPV to make your recommendation.