XYZ Enterprises Investment Decisions

• Two projects are proposed by XYZ Enterprises with the following cash flows:
• Year 0: Project A: -300,000, Project B: -300,000
• Year 1: Project A: 150,000, Project B: 70,000
• Year 2: Project A: 100,000, Project B: 100,000
• Year 3: Project A: 80,000, Project B: 120,000
• Year 4: Project A: 70,000, Project B: 160,000
• Cost of capital: 12%
• Requirements:
  1. Calculate the NPV for both projects.
  2. Calculate the IRR for both projects.
  3. Determine which project should be selected based on NPV and IRR.
  4. Evaluate the profitability index for each project.