?The? High-Flying Growth Company? (HFGC) has been growing veryrapidly in recent? years, making its shareholders rich in theprocess. The average annual rate of return on the stock in the lastfew years has been 23?%, and HFGC managers believe that 23% is areasonable figure for the? firm's cost of capital. To sustain ahigh growth? rate, the HFGC CEO argues that the company mustcontinue to invest in projects that offer the highest rate ofreturn possible. Two projects are currently under review. The firstis an expansion of the? firm's production? capacity, and the secondproject involves introducing one of the? firm's existing productsinto a new market. Cash flows from each project appear in thefollowing? table .

a.??Calculate the NPV for both projects. Rank the projects basedon their NPVs.

b.??Calculate the IRR for both projects. Rank the projects basedon their IRRs.

c.??Calculate the PI for both projects. Rank the projects basedon their PIs.

d.??The firm can only afford to undertake one of theseinvestments. What do you think the firm should? do?

The NPV of the plant expansion project is found to be________________?

The NPV of the product introduction project is____________________?

The IRR of the plant expansion project is ______________?

The IRR of the product introduction project is________________?

The PI of the plant expansion project is found tobe____________?

The PI of the product introduction project is found tobe________________?

Year	Plant Expansion	Product Introduction
0	-$2,800,000	-$400,000
1	$1,750,000	$325,000
2	$2,250,000	$325,000
3	$2,250,000	$250,000
4	$1,500,000	$250,000