A mining company is trying to make up their mind whether to invest in a project located in Mindanao or in another project in Indonesia. Both are gold mines. you were engaged by the investor to make a recommendation as to which will be profitable for the company. The cost of money in the Philippines is 20% while in Indonesia it is 26%. The following data pertains:

a) What is the NPV of the project in Mindanao?

b) What is the NPV of the project in Indonesia?

c) Which of the 2 projects will you recommend? Why?

Year 1 2 3 OWNE 4 5 Projected Expected Profits Indonesia Mindanao 7.55 M 7.20 M 8.15 M 7.40 M 8.45 M 7.30 M 9.47 M 7.80 M 9.95 M 7.80 M 9.78 M 7.30 M 10.14 M 7.20 M 10.38 M 7.00 M 10.55 M 6.80 M 10.64 M 6.50 M 6 7 8 9 10