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Assume you are the Chief Financial Officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - Project X
Assume you are the Chief Financial Officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - Project X & Project Y. Each project has a net investment outlay of $10,000 and the opportunity cost for each project is 12%. You have calculated each project's payback, net present value & internal rate of return as follows:
Project X Project Y
Payback 5.25 years 3.01 years NPV -$101 $567 IRR 11.42% 15.6%
Which project is financially acceptable?
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