Question: Question 6: XYZ Construction is considering two projects to develop. The expected cash inflows are as follows : Project M Project N Year 1 10,000

Question 6: XYZ Construction is considering two projects to develop. The expected cash inflows are as follows : Project M Project N Year 1 10,000 25,000 Year 2 15,000 25,000 Year 3 20,000 25,000 Year 4 25,000 25,000 Year 5 30,000 25,000 Each Project requires an investment of $100,000. A rate of 10% has been selected for the NPV Analysis. Required: a) Calculate the NPV and the Profitability Index and suggest which project should be recommended based on each method. b) Explain what the key decisions are a Finance Manager has to take in an Organization with suitable examples.

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