Chimay Inc. has been considering two mutually exclusive projects with the following NPVs and project lives.
Project
NPV
Economic Life
A
5,000
3 years
B
6,500
5 years
Chimay Inc. cost of capital is 15%. Assuming that projects can be repeated with the same cash flow and risk profiles what would be the respective Net Terminal Values of projects A and B (round to the next integer)? What should be the decision? Please show work