Healey Development Company has two competing projects: an office building and a condominium complex. Both projects have an initial investment of $2,000,000.
The net cash flows estimated for the two projects are as follows:

The estimated residual value of the office building at the end of Year 4 is $900,000.
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 Office Building $950,000 600,000 500,000 450,000 350,000 350,000 300,000 300,000 Year Condominium Complex $1,200,000 900,000 700,000 400,000 4 8