Question
. Delta Company is evaluating two different capital investments, Project X and Y. Either X or Y would cost $100,000, and the company cannot afford
. Delta Company is evaluating two different capital investments, Project X and Y. Either X or Y would cost $100,000, and the company cannot afford to do both. The company expects that Project X would provide net cash inflows of $30,000 per year for 5 years. For Project Y, the net cash inflows are expected to be as follows: Delta's cost of capital is 12% Required: 1) Calculate the present value index for Project X and for Project Y. 2) Indicate whether each of the projects is an acceptable investment. 3) Which of the two projects should Delta implement?
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