Connor Corporation is considering two projects (see below) For your analysis, assume these projects are mutually exclusive with a required rate of return of 10 Project 1 Project 2 Initial investment $(465,000) $(700,000) Cash inflow Year 1 $510,000 $850,000 Compute the following for each project NPV (net present value) PI (profitability index) IRR (internal rate of return) Based on your analysis, answer the following questions Which is the best choice Why Which project should be selected and why If the projects had the same IRR amounts but different NPV totals, then how would you know which project to select Explain What would happen if both projects had negative NPV totals Which project would you choose What do negative NPVs indicate Explain Should we also use the payback method to assist us in project selection Why or why not Explain

Question: Connor Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 10%.

Connor Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 10%.

Project 1	Project 2
Initial investment	$(465,000)	$(700,000)
Cash inflow Year 1	$510,000	$850,000

Compute the following for each project:

NPV (net present value)
PI (profitability index)
IRR (internal rate of return)

Based on your analysis, answer the following questions :

Which is the best choice? Why?

Which project should be selected and why? If the projects had the same IRR amounts but different NPV totals, then how would you know which project to select? Explain.

What would happen if both projects had negative NPV totals? Which project would you choose? What do negative NPVs indicate? Explain.

Should we also use the payback method to assist us in project selection? Why or why not? Explain.

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