Nico Manufacturing is considering investment in one of two mutually exclusive projects X and Y which are described below. Nico Manufacturing's overall cost of capital is 15 percent, the market return is 15 percent and the risk-free rate is 5 percent. Nico estimates that the beta for project X is 1.20 and the beta for project Y is 1.40.

Project X Project Y

Initial Investment $3,500,000 $3,900,000

Year Cash Inflows (CF)

1 $1,500,000 $1,100,000

2 1,500,000 1,600,000

3 1,500,000 1,900,000

4 1,500,000 2,300,000

----Calculate the risk-adjusted discount rates for Project X and Project Y.