Integrative Conflicting Rankings. The High-Flying Growth Company (HFGC) has been growing very rapidly in recent years, making its shareholders rich in the process. The average annual rate of return on the stock in the last few years has been 18%, and HFGC managers believe that 18% is a reasonable figure for the firms cost of capital. To sustain a high growth rate, the HFGC CEO argues that the company must continue to invest in projects that offer the highest rate of return possible. Two projects are currently under review. The first is an expansion of the firms production capacity, and the second project involves introducing one of the firms existing products into a new market. Cash flows from each project appear in the attached table.

Calculate the NPV for both projects. Rank the projects based on their NPVs.

Calculate the IRR for both projects. Rank the projects based on their IRRs.

Calculate the Pl for both projects. Rank the projects based on their Pls.

Display all calculations in an Excel Speadsheet.

The firm can only afford to undertake one of these investments. What do you think the firm should do?

a. The NPV of the plant epansion project is _________. (Round to the nearest dollar)

The NPV of the product introduction is $___________.. (Round o the nearest dollar)

According to the NPV method, which project should the firm choose? (Select the best answer)

____ Plant Expansion

____Product introduction

b. The IRR of the plant expansion project is __________%. (Round to two decimal places.

The IRR of the product introduction project is _________%. (Round to the two decimal places.

According to the IRR method, which project

Data Table

Year	Plant Expansion	Product Introduction
0	-$3,600,000	-$400,000
1	$2,250,000	$250,000
2	$2,750,000	$300,000
3	$2,750,000	$300,000
4	$1,500,000	$325,000

should the firm choose? (Select the best answer)

______ Production introduction

______ Plant expansion

c. The Pl of the plant expansion project is ______________. (Round to two decimal places)

The Pl of the produc introduciton project is _____________. (Round to two decimall places)

According to the Pl method, which project should the firm choose? (Select the best answer below).

_______Product introduciton

_______Plant expansion

d. If the firm can only afford to undertake one of these investments, which project should the firm choose? (Select the best ansser below)

________ Product introducion

________Plant expansion