Question
Both Project X and Project Y require an initial investment of $50,000 and have projected cash inflows as follows: Year Project X Project Y 1
Both Project X and Project Y require an initial investment of $50,000 and have projected cash inflows as follows:
Year | Project X | Project Y |
1 | $15,000 | $20,000 |
2 | $20,000 | $15,000 |
3 | $25,000 | $10,000 |
4 | $30,000 | $5,000 |
a. Calculate each project’s net present value (NPV) if the opportunity cost is 10%. b. Calculate the payback period for each project. c. Determine the profitability index for both projects. d. Should either project be rejected if they are independent? e. If Projects X and Y are mutually exclusive, which one should be chosen?
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Introduction To Financial Accounting
Authors: Anne Marie Ward, Andrew Thomas
7th edition
77138449, 978-0077132682, 77132688, 978-0077138448
