12-4 Basic scenario analysis Murdock Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firm's financial analysts have de- veloped pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with each project. These estimates are shown in the following table. Project A -$8,000 Project B -$8,000 Initial investment (CFo) Outcome Pessimistic Most likely Optimistic Annual cash inflows (CF) $ 900 1,000 1,100 S 200 1,000 1,800 a. Determine the range of annual cash inflows for ceach of the two projects. b. Assume that the firm's cost of capital is 10% and that both projects have 20-year lives. Construct a table similar to this one for the NPVs for each project. Include the range of NPVs for each project. c. Do parts a and b provide consistent views of the two projects? Explain. d. Which project do you recommend? Why