Prompt: Evaluate an investment decision among two projects according to the four investment decision rules.

Scenario: Fictional organization, ABC Company, is considering two alternative investments, Project One and Project Two.

Project One Initial Cost: $1,000,000 Annual Cash Flow: $200,000 for 10 years Discount Rate: 0.05

Project Two Initial Cost: $5,000,000 Annual Cash Flow: $300,000 (forever) Discount Rate: 0.05

Step One: Calculate NPV for each project.

Step Two: Calculate the IRR for each project.

Step Three: Calculate the payback period for each project.

Step Four: Calculate the PI for each project.

Question Two: Which project would you invest in, Project One or Project Two? How does each decision rule lead you to your specific decision?