ABC Corporation Projects

• The following details relate to two mutually exclusive projects having equal lives and cost outlay but different cash inflow patterns.
• Year 0: Project X: -200,000, Project Y: -200,000
• Year 1: Project X: 100,000, Project Y: 50,000
• Year 2: Project X: 60,000, Project Y: 70,000
• Year 3: Project X: 40,000, Project Y: 80,000
• Year 4: Project X: 20,000, Project Y: 100,000
• Cost of capital: 10%
• Requirements:
  1. Calculate the Net Present Value (NPV) for both projects.
  2. Calculate the Internal Rate of Return (IRR) for both projects.
  3. Determine which project should be selected based on NPV and IRR.
  4. Assess the payback period for each project.