Basic scenario analysis Prime Paints is in the process of evaluating two mutually exclusive additions to its processing capacity. The firms financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows associated with each project. The following table shows these estimates.

	Project A	Project B
Initial Investment	- $12,200	- $12,200
Outcome	Annual Cash Flows	Annual Cash Flows
Pessimistic	$850	$1,550
Most Likely	$1,650	$1,650
Optimistic	$2,450	$1,750

a. Determine the range of annual cash inflows for each project.

b. Assume that the firms cost of capital is 9.3% and that both projects have 15-year lives. Construct a table similar to this one for the NPVs for each project. Include the range of NPVs for each project.

c. Do parts a and b provide consistent views of the two projects? Explain.

d. Which project do you recommend? Why?