Risk-Adjusted NPV Assignment | Homework For You

Problem 11-19 (similar to) Question Help (Risk-adjusted NPV) The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of $11,000 and will operate for 8 years. Project A will produce expected cash flows of $7,000 per year for years 1 through 8, whereas project B will produce expected cash flows of $8,000 per year for years 1 through 8. Because project B is the risker of the two projects, the management of Hokie Corporation has decided to apply a required rate of return of 18 percent to its evaluation but only a required rate of return 11 percent to project A. Determine each project’s risk-adjusted net present value What is the risk-adjusted NPV of project A? $ (Round to the nearest cent.) Get Finance homework help today