Las Casitas Lodge Peru is one of the well-known luxury resorts in Peru. The company's management is undergoing expansion strategy to cater higher demand in 2023 onward. As part of the strategy, the company is evaluating two independent projects that should be started in mid-2021 in order to be completed in the end of December 2023. In 2020, Las Casitas received new capital injection from strategic investor in London, UK. Next week, the financial manager of Las Casitas Lodge will bring the two project's proposals to the board of directors for their approval. The manager prepares the cost and expected cash flows generating from the project as shown in Table 1.

Table 1 Year Project Cusco A Project Cusco B 0 Initial investment of EUR490,000 Initial investment of EUR 600,000 1 Cash flow year 1 = EUR120,000 Cash flow year 1 of EUR130,000 2 Cash flow year 2 = EUR120,000 Cash flow increased by 11% from the previous year. 3 Cash flow increased by 10% from Cash flow increased by 11% from the the previous year. previous year. 4 Cash flow increased by 10% from Cash flow increased by 11% from the the previous year. previous year. 5 Cash flow increased by 10% from Cash flow increased by 11% from the the previous year. previous year. 6 Cash flow increased by 10% from Cash flow increased by 11% from the the previous year. previous year. 7 Cash flow increased by 10% from Cash flow increased by 11% from the the previous year. previous year