The Riverside Company is evaluating two mutually exclusive assets: Black and White, at the end of $2020.$ The firm$$s weighted average cost of capital is $8\%.$ Data for each project are as follows:

Black White

Cost of investment$$end $202025,000$ Cost of investment$$end $2020$ $$43,000$

Cash inflow$20218,000$ Cash inflow$202120,000$

Cash inflow$20228,000$ Cash inflow$202230,000$

Cash inflow$20238,000$ Cash inflow$202310,000$

Cash inflow$20248,000$ Cash inflow$20240$

Cash inflow$20258,000$ Cash inflow$20250$

Requirements:

$$ Compute the net present value for each asset using Excel's NPV function.

$$ Determine which project the Riverside Company should invest in based on NPV$.$

$$ Compute the profitability index for each project.

$$ Determine which project the Riverside Company should invest in based on the profitability index.

$$ Should the firm invest in the Black or White project? What is the basis for your choice?