document.write( "Question 327910: Any help with this problem would be greatly appreciated.\r \n" );
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document.write( "(Risk-adjusted discount rates and risk classes) The G. Wolfe Corporation is examining two capital- \n" );
document.write( "budgeting projects with 5-year lives. The first, project A, is a replacement project; the second, project \n" );
document.write( "B, is a project unrelated to current operations. The G. Wolfe Corporation uses the risk-adjusted \n" );
document.write( "discount rate method and groups projects according to purpose, and then it uses a required rate of return \n" );
document.write( "or discount rate that has been preassigned to that purpose or risk class. The expected cash flows \n" );
document.write( "for these projects are given here: \n" );
document.write( "PROJECT A PROJECT B \n" );
document.write( "Initial investment _$250,000 _$400,000 \n" );
document.write( "Cash inflows: \n" );
document.write( "Year 1 $30,000 $135,000 \n" );
document.write( "Year 2 40,000 135,000 \n" );
document.write( "Year 3 50,000 135,000 \n" );
document.write( "Year 4 90,000 135,000 \n" );
document.write( "Year 5 130,000 135,000\r \n" );
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document.write( "The purpose/risk classes and preassigned required rates of return are as follows: \n" );
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document.write( "PURPOSE REQUIRED RATE OF RETURN \n" );
document.write( "Replacement decision 12% \n" );
document.write( "Modification or expansion of existing product line 15 \n" );
document.write( "Project unrelated to current operations 18 \n" );
document.write( "Research and development operations 20 \n" );
document.write( "Determine each project’s risk-adjusted net present value. \n" );
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