4. Scottso has an investment opportunity (project Y) costing $150,000 that is expected to yield the following cash flows over the next five years:

Year 1:$30,000

Year 2:$60,000

Year 3:$90,000

Year 4:$60,000

Year 5:$30,000

a.Find the NPV of the investment at a discount rate of 10%.

b. A second project (project X) is being considered which has a positive NPV and a profitability index of 1.45. Should the company select project X or Y and why?

5. A company is considering a capital expenditure that has the following predicted cash flows:

Initial Investment$(85,160)

Operations:

Year 1 36,000

Year 2 50,000

Year 3 40,000

Disinvestment $8,000 (at year 3)

Determine the NPV of the project assuming a discount rate of 14%.

6. A company has an initial investment of $90,000 and the following cash flows:

Year 1 15,000

Year 2 15,000

Year 3 15,000

Year 4 15,000

Year 5 20,000

Year 6 10,000

Year 7 8,000

At year 7 the company must pay an additional $3,000 for disinvestment. Given a discount rate of 10% calculate the NPV of the project and determine if it is an acceptable project.