1.

Suppose, your company is considering two mutually exclusive projects, X and Y whose costs and cash flows are shown below. Assume that the projects are equally risky, and their cost of capital is 12%.

Year	Project X	Project Y
0	$(5,000)	$(5,000)
1	1,000	4,500
2	1,500	1,500
3	2,000	1,000
4	4,000	500

What are the profitability index (PI) of Project X (PI_X) and Project Y (PI_Y). If the projects are independent, which project would you choose?

options:

	PIX = 1.10 ; PIY = 1.20 ; Accept project Y.
	PIX = 1.11 ; PIY = 1.125; Reject both projects.
	PIX = 1.18 ; PIY = 1.15; Accept project X.
	PIX = 1.21; PIY = 1.25; Accept both projects.

2.

Your company is considering two mutually exclusive projects, X and Y whose costs and cash flows are shown below. Assume that the projects are equally risky, and their cost of capital is 12%.

Year	Project X	Project Y
0	$(5,500)	$(5,500)
1	1,000	4,500
2	1,500	1,500
3	2,000	1,000
4	4,500	800

What are MIRRs of Project X and Project Y? Which project you will accept based on MIRR project selection criterion, if projects are mutually exclusive?

options:

	MIRRx = 16.46%; MIRRy = 16.02%; accept Project X
	MIRRx = 16.46%; MIRRy = 16.02%; accept Project X
	MIRRx = 16.20%; MIRRy = 16.48%; accept Project X
	MIRRx=17.49%; MIRRy=18.39%; accept Project Y

3. Suppose, your company is considering two mutually exclusive projects, X and Y whose costs and cash flows are shown below. Assume that the projects are equally risky, and their cost of capital is 12%.

Year	Project X	Project Y
0	$(5,000)	$(5,000)
1	1,000	4,500
2	1,500	1,500
3	2,000	1,000
4	4,000	500

What are the net present value of both Project X (NPV_X) and Project Y (NPV_Y)? If projects are mutually exclusive, which project do you accept?

options:

	NPVX = $1054; NPVY =$1240; Reject both projects.
	NPVX = $1140; NPVY =$1243; Accept both Project X and Project Y.
	NPVX = $1054; NPVY =$1243; Accept Project Y.
	NPVX = $1243; NPVY =$1054; Accept Project X.