• ABC Corporation is evaluating two mutually exclusive projects, Project A and Project B. The cash flows for each project are as follows:

  Project A:

  • Initial Investment: $500,000
  • Cash Flows: $150,000 per year for 5 years

• Project B:

  • Initial Investment: $700,000
  • Cash Flows: $200,000 per year for 8 years

• Calculate the net present value (NPV) and profitability index (PI) for each project and recommend the better investment.