You are considering two possible projects (Project A and Project B) that could start immediately. Your boss has indicated that she only wants to select one of these projects given resource constraints, and asked you to evaluate each project and recommend which project you think the company should adopt. You have made the following cash flow forecasts for each project.

Project A would require an initial investment of $18M (USD) to begin the project and additional investments of $9M at the end of year 1 and $2M at the end of year 2. It is estimated that the project would return a positive cash flow of $8M at the end of year 3 and $45M at the end of year 4.

Project B would require an initial investment of $22M but would return positive cash flows of $2M, $4M, $8M, $12M, and $17M at the end of years 1 - 5.

You estimate that an appropriate annual discount rate is 11 percent based on your companys future projected performance. Furthermore, the CFO has indicated that there is an inflation rate of 3.5 percent that should be factored into your calculations; he feels that this rate will be fairly constant over the foreseeable future.

Your boss indicated that you should consider the inflation rate adjusted NPV, the IRR, and the Profitability Index when comparing these two projects. Using discrete discounting and these metrics, which project would you recommend? Why? What other factors (other than these metrics) might be important when comparing these projects?