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IT Services Ltd is analyzing two projects, Project X and Project Y, with the following cash flow projections: Year Project X Project Y 0 $(180)
IT Services Ltd is analyzing two projects, Project X and Project Y, with the following cash flow projections:
Year | Project X | Project Y |
0 | $(180) | $(170) |
1 | 60 | 50 |
2 | 70 | 60 |
3 | 80 | 70 |
4 | 90 | 80 |
The company's discount rate is 7%. You need to evaluate:
a. The traditional payback period for each project. b. The NPV for both projects. c. The IRR for each project. d. Compare the risk levels of Project X and Project Y. e. Provide a recommendation on which project to choose and explain why.
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