Capital Budgeting Analysis A company is evaluating two exclusive projects, X and Y. Project X requires an investment of $1,000 and yields cash flows of $600 annually for 2 years. Project Y requires an investment of $1,000 and yields cash flows of $650 and $500 in the next 2 years.

Requirements:

1. Calculate the IRR for both projects.
2. Determine the NPV for both projects at a discount rate of 8%, 12%, and 20%.
3. Plot the NPV against the discount rate for both projects.
4. Recommend which project to undertake if the cost of capital is 12%.