Jefferson International is trying to choose between the following two mutually exclusive design projects:

Year	Cash Flow A	Cash Flow B
0	-$75,000	-$38,000
1	32,400	17,800
2	30,200	14,200
3	36,600	19,800

The required return is 12 percent.

i) Rank the projects using profitability index (PI) decision rule.

ii) If the company applies the NPV decision rule, which project should it take?

iii) Given your first two answers, which project should the firm accept?

B

Suppose the company is granted a 5-year lease of a land to complete the project. The company is required to restore the land to its former condition after its 5 years tenure. Annual net revenue are expected to be $250,000 for 5 years and the budgeted cost of restoration works is $500,000.

Project	Year	Cash-Flow
Initial Investment	Now	-800,000
Annual Net Revenue	1-4	350,000
Net Cashflow	5	-250,000

Calculate the MIRR for the project, if positive cash flows are expected to be invested at 10% return and money can be borrowed at 7%.