Cantrell Cash Flow:

Year 5, Cash Flow $12,000

Year 4, Cash Flow $12,000 Year 3, Cash Flow $11,000

Year 2, Cash Flow $11,000

Year 1, Cash Flow $10,500

Fuller Cash Flow:

Year 5, Cash Flow $15,000

year 4, Cash Flow $14,000 Year 3, Cash Flow $12,500

Year 2, Cash Flow $13,500

Year 1, Cash Flow $12,000 A home remodeling company is considering investing in two different house flips, Cantrell and Fuller. The company would like your help in determining which flip they should invest in. Assume the company uses a discount rate of 9 percent to analyze its projects. Use the Tableau Dashboard to assist in your analysis.

Required:

1. Calculate the profitability index of each house flip.
2. Assume the company has a requirement that any projects must reach a 1.00 profitability index prior to the company investing. Based on the IRR, which house(s) should the company pursue?
3. Now assume the company has a limited amount to invest but no profitability index hurdle. Which house should they select based on the profitability index analysis?