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Net present value—unequal lives   Project A requires an original investment of $32,600

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Net present value—unequal lives

Project A requires an original investment of $32,600. The project will yield cash flows of $7,000 per year for nine years. Project B has a computed net present value of $3,500 over a six-year life. Project A could be sold at the end of six years for a price of $15,000. 

(a) Using the present value tables in Exhibits 2 and 5, determine the net present value of Project A over a six-year life, with residual value, assuming a minimum rate of return of 12%.