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1.As the director of capital budgeting for Denver Corporation, you are evaluating two projects with the following net cash flows: Project XProject Z Year Cash

1.As the director of capital budgeting for Denver Corporation, you are evaluating two projects with the following net cash flows:

Project XProject Z

YearCash FlowCash Flow

0-$100,000-$100,000

170,00010,000

250,00030,000

310,00040,000

45,00090,000

Denver's cost of capital is 15 percent.

a.Compute the Payback, NPV and IRR for both projects.

b.If the projects are independent, which project(s) would you accept?Why?

b.If the projects are mutually exclusive, which project(s) would you accept?Why?

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