Connor Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 12%. Project 1 Project 2 Initial...

Connor Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 12%.

Compute the following:

• NPV (net present value)


• PI (profitability index)


• IRR (internal rate of return)

Based on your analysis, answer the following questions:

• Which is the best choice? Why?


• Which project should be selected and why? If the projects had the same IRR amounts but different NPV totals, then how would you know which project to select? Explain.

• What would happen if both projects had negative NPV totals? Which project would you choose? What do negative NPVs indicate? Explain.


• Should we also use the payback method to assist us in project selection? Why or why not? Explain.