FB Company is considering investing in two construction projects, and he developed the following estimates...
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FB Company is considering investing in two construction projects, and he developed the following estimates of the cash flows. His required return is 10% and views these projects as equally risky. Year Project 1 cash flows Project 2 cash flows 0 -$550,000 -$700,000 1 $150,000 $200,000 2 $200,000 $150,000 3 $150,000 $250,000 4 $150,000 $150,000 5 $100,000 $150,000 3 4 Required: a) Calculate the net present value (NPV) of each project, assess its acceptability, and indicate which project is best using NPV. b) Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using Pl. c) If both the projects have recorded a positive NPV value and the projects are mutually exclusive, which projects would you recommend for FB Company to undertake? Why
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