XYZ Construction is considering two projects to develop. The expected cash inflows are as follows :

Project MProject N

Year 110,00025,000

Year 215,00025,000

Year 3 20,00025,000

Year 425,00025,000

Year 530,00025,000

Each Project requires an investment of $100,000. A rate of 10% has been selected for the NPV Analysis.

Required :

Calculate the NPV and the Profitability Index and suggest which project should be

recommended based on each method.