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2. The following cash flows are give for the two mutually exclusive projects X and Y. The project X requires an initial investment of $12,000
2. The following cash flows are give for the two mutually exclusive projects X and Y. The project X requires an initial investment of $12,000 in time 0and project Y needs an initial investment of $10,000 in time 0.
Year Project X Project Y 1 $4,500 $9,000
2 6,000 5,000
3 7,500 4.500
4 9,000 3,000
5 5,000 4,000
(a) Calculate the NPV for each project using a discount rate of 12%.
(b) State your accept/reject decision
(c) What would be your accept/reject decision if they were to be independent projects?
NO EXCEL PLEASE!
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