Finance 2 Capital Budgeting Techniques Homework Q: As the director of capital budgeting for Olive Corporation, you are evaluating two mutually exclusive projects with the following net cash flows: Initial Investment Year 0 1 2 3 4 Project X Project Z Cash Flow Cash Flow -$100,000 -$100,000 50,000 32,000 40,000 32,000 30,000 32,000 10,000 32,000 Cost of capital is 8% a. Calculate the payback period for both projects and determine if accepted or rejected if the firm's maximum acceptable payback period is 3 years. Which project do you choose? b. Calculate the Net Present value for both projects and determine if accepted or rejected. Which project do you choose? c. Calculate the profitability index for both projects and determine if accepted or rejected. Which project do you choose