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 here:

PROJECT A PROJECT B

Initial investment....................................-$250,000...............-$400,000

Cash inflows:

Year 1..................................................$130,000................$135,000

Year 2.....................................................40,000..................135,000

Year 3.....................................................50,000..................135,000

Year 4.....................................................90,000..................135,000

Year 5...................................................130,000..................135,000

The purpose/risk classes and preassigned required rates of return are as follows:

PURPOSE REQUIRED RATE OF RETURN

Replacement decision...............................................12%

Modification or expansion of existing product line...............15

Project unrelated to current operations.............................18

Research and development operations..............................20

Determine each project's risk-adjusted net present value.