Question
Dilapidated Corporation is considering the following two investment proposals. As the financial manager, you are responsible for making a recommendation to the Board of Directors.
Dilapidated Corporation is considering the following two investment proposals. As the financial manager, you are responsible for making a recommendation to the Board of Directors. The projected cash flows for projects X and Y are as follows:
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Project X | -$1,500 | $1,200 | $600 | $300 | $150 | $80 |
| Project Y | -$5,000 | $4,000 | $2,000 | $1,000 | $500 | $250 |
Discount Rate is 13%
a) Compute the NPV, IRR and PI of each project. Which projects would you recommend if there is enough capital for both projects.
b) If the projects are mutually exclusive, which project would you recommend and why?
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American Public School Finance
Authors: William A. Owings, Leslie S. Kaplan
1st Edition
0495807834, 9780495807834
