Assignment 4 - Capital Budgeting You are evaluating two mutually exclusive projects with the following net cash flows: Project X Project Y Year Cash Flow Cash Flow 0 $1000 100 300 400 700 $1100 1000 100 150 50 The cost of capital is 12 percent. 1. What is each project's payback period? If the cutoff period is 3 year, then which project would you choose? 2. What is each project's discounted payback period? If the cutoff period is 3 year, then which project would you choose? 3. What is each project's NPV? Which project would you choose based on NPV rule? 4. What is each project's IRR? Which project would you choose based on IRR rule? 5. What is each project's profitability index? Based on profitability index, which project is preferred? 6. What is each project's equivalent annual annuity (EAA)? Based on EAA, which project is preferred