The G.Wolf Corporation is examining two capital-budgeting projects with five year lives.

The  G.Wolf Corporation is examining two capital-budgeting projects with five 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 uses a required rate of return or discount rate that has been pre assigned to that purpose or risk class.

The expected cash flows for these projects are as follows:

The purpose or 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

Determiner the project's risk-adjusted net present value.