A company is considering Projects Gina and Ruppie. The required return for each project is 10.25 percent. Calculate the NPV for each project. Which project should be accepted using NPV?

Year 0 1 2 3 4

CF Gina -3,578 1,234 2,654 4,567 7,890

CF Ruppie -4,567 3,999 3,258 3,698 5,678

($ millions)

Calculate the IRR for each project. Which project should be accepted using IRR?

Calculate the profitability index for each project in question 2. Which project should be accepted? Why? Is it necessary to calculate the PI? Why or why not?