The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of...
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Accounting
The Hokie Corporation is considering two mutually exclusive projects. Both require an initial outlay of $13,000 and will operate for 6 years. Project A will produce expected cash flows of $5,000 per year for years 1 through 6, whereas project B will produce expected cash flows of $6,000 per year for years 1 through 6. Because project B is the riskier of the two projects, the management of Hokie Corporation has decided to apply a required rate of return of 16 percent to its evaluation but only a required rate of return 9 percent to project A. Determine each project's risk-adjusted net present value.
What is the risk-adjusted NPV of project B? $_______
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