12. For Projects X and Y, the following cash flows are given: Cash Flows (3) Projects C C C x 750 +250 250 +160 Y -750 +250 +250 +460

(a) Calculate the NPV of each project for discount rates 0, 5, 8, 10, 12 and 20 per cent. Plot these on an PV graph.

(b) Read the IRR for each project from the graph in (a).

(c) When and why should Project X be accepted?

(d) Compute the NPV of the incremental investment (Y-X) for discount rates, 0, 5, 8, 10, 12 and 20 per cent. Plot them on graph. Show under what circumstances would you accept X?