Investment Decision Project Mu:

• Initial Investment: $120,000
• Cash Flows:
  • Year 1: $35,000
  • Year 2: $40,000
  • Year 3: $45,000
  • Year 4: $50,000
  • Year 5: $55,000

Project Nu:

• Initial Investment: $130,000
• Cash Flows:
  • Year 1: $30,000
  • Year 2: $35,000
  • Year 3: $40,000
  • Year 4: $45,000
  • Year 5: $60,000

Requirements:

1. Calculate the NPV for both projects using a discount rate of 11%.
2. Determine the IRR for both projects.
3. Calculate the Payback Period and Discounted Payback Period for both projects.
4. Compute the Profitability Index (PI) for both projects.
5. Provide a recommendation on which project to pursue assuming they are independent.