Blue Ridge Development Company has two competing projects: an apartment complex and an office building. Both projects have an initial investment of $720,000. 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.

Net Cash Flow Year Apartment Complex Office Building $240,000 210,000 210,000 160,000 150,000 120,000 90,000 60,000 $280,000 280,000 265,000 265,000 4