Multiple Choice
Real Time Systems Inc.is considering the development of one of two mutually exclusive new computer models.Each will require a net investment of $5,000.The cash flow figures for each project are shown below: 
Model B, which will use a new type of laser disk drive, is considered a high-risk project, while Model A is of average risk.Real Time adds 2 percentage points to arrive at a risk-adjusted discount rate when evaluating a high-risk project.The rate used for average risk projects is 12 percent.Which of the following statements regarding the NPVs for Models A and B is most correct?
A) NPVA = $380; NPVB = $1,815.
B) NPVA = $197; NPVB = $1,590.
C) NPVA = $380; NPVB = $1,590.
D) NPVA = $5,380; NPVB = $6,590.
E) None of the above statements is correct.
Correct Answer:
Verified
Correct Answer:
Verified
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