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Green Forest Shipping has a weighted-average cost of capital of 7.47 percent and is evaluating...

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Finance

Green Forest Shipping has a weighted-average cost of capital of 7.47 percent and is evaluating two projects: A and B. Project A involves an initial investment of 4,701 dollars and an expected cash flow of 7,381 dollars in 6 years. Project A is considered more risky than an average-risk project at Green Forest Shipping, such that the appropriate discount rate for it is 0.96 percentage points different than the discount rate used for an average-risk project at Green Forest Shipping. The internal rate of return for project A is 7.81 percent. Project B involves an initial investment of 4,564 dollars and an expected cash flow of 7,713 dollars in 9 years. Project B is considered less risky than an average-risk project at Green Forest Shipping, such that the appropriate discount rate for it is 0.87 percentage points different than the discount rate used for an average-risk project at Green Forest Shipping. The internal rate of return for project B is 6 percent. What is X if X equals the NPV of project A plus the NPV of project B?

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