Calculate the npv and the profitability index

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Reference no: EM132435640

Problem: XYZ Construction is considering two projects to develop. The expected cash inflows are as follows:

Project M Project N

Year 1 10,000 25,000

Year 2 15,000 25,000

Year 3 20,000 25,000

Year 4 25,000 25,000

Year 5 30,000 25,000

Each Project requires an investment of $100,000. A rate of 10% has been selected for the NPV Analysis.

Required:

Calculate the NPV and the Profitability Index and suggest which project should be recommended based on each method.

Reference no: EM132435640

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