Bellco Development Company has two competing projects: an apartment complex and an office building. Both projects have an initial investment of $775,000. The net cash flows estimated for the two projects are as follows:

The estimated residual value of the Apartment Complex at the end of year 4 is $420,000. Determine which project should be favored, comparing the net present values of the two projects and assuming a minimum rate of return of 15%. Use the table of present values in thechapter.

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Net Cash Flow Year Apartment Complex Office Building $220,000 200,000 200,000 180,000 150,000 120,000 90,000 60,000 $300,000 300,000 275,000 275,000 4 6