What is the NPV of project B? Which project should comfy home choose? Use the following information to answer to Questions 17 and 18.Comfy Home is considering one of two mutually exclusive investments.Comfy Home's cost of capital is 10%Ignore the effects of taxes.Project AComfy Home will purchase a specialized candle mold machine that will allow it toplace it in service on 12/31/2021. The machine will be depreciated straight-line <$14,000 every year for 5 years.Discount rate10%YearCash Flows12/31/21$(40,000)1 12/31/222 12/31/233 12/31/2414,00014,00014,0004 12/31/2514,0005 12/31/2614,000$30,000Project BComfy Home will purchase a patent for several perfumes it will use in its candles. Iits useful life of 9 years. Comfy Home expects the patent to generate net cash flowYear12/31/211 12/31/22Cash Flows$(40,000)10,0002 12/31/2310,0003 12/31/2410,0004 12/31/2510,0005 12/31/2610,0006 12/31/2710,0007 12/31/2810,0008 12/31/2910,0009 12/31/3010,000Total$50,00017 What is the NPV of project B?18 Which project should Comfy Home choose?

Here's a detailed calculation for better understanding. The detailed NPV calculation for Project B…

Answered: Use the following information to answer…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 8P

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