1.Boca Raton Company is deciding between two projects. Each project requires an initial investment of $350,000. The projected net cash flows for the two projects are listed below. The revenue is to be received at the end of each year. Boca Raton requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity factors for 10% are presented below. Use net present value to determine which project should be pursued and explain why. (Hint: PV of annuity factors are used when expect to receive a series of equal cash flows)

Project A

Project B

Present Value

Present Value of an

Periods

Cash Flows

Cash Flows

of 1 at 10%

Annuity of 1 at 10%

1

$50,000

$160,000

0.9091

0.9091

2

$200,000

$175,000

0.8264

1.7355

3

$250,000

$175,000

0.7513

2.4869