Reference no: EM133000586

In your role as a senior financial analyst for Capital Financial, you are told the remaining budget to invest in a cost-saving project is $2.5 million. You have identified two opportunities that warrant in-depth analysis, and you will consider the cash flow from the following two projects (Project A and Project B) in your report.

-Year 0
-Project A: -750,000
-Project B: -2,400,000
-Year 1
-Project A: 360,000
-Project B: 1,700,000
-Year 2
-Project A: 420,000
-Project B: 800,000
-Year 3
-Project A: 340,000
-Project B: 850,000

After completing your analysis, write a formal business letter to the CEO and Board of Directors explaining your findings. Be sure to address the following:

-Calculate and include the IRR and NPV for the cash flows of both projects.

-Explain which project has the highest IRR and why this is important.

-Describe which project has the highest NPV and whether it is consistent with the IRR rule.

-Summarize the analysis of both projects, focusing on the pros and cons of each project, include your calculations for support in the business letter.

-Develop a persuasive argument using the calculations and data to support your recommendation for the project that should be pursued by the company.