Nile Inc. wants to choose the better of two mutually exclusive projects that expand warehouse capacity. The projects' cash flows are shown in the following table:

The cost of capital is 14%. Round to two decimal places.)

a.Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs.

b.Which project is preferred?

Project X Project Y Initial investment (CF) $500,000 $290,000 Year (t) Cash inflows (CFt) 1 $120,000 $130,000 2 $120,000 $100,000 3 $150,000 $85,000 4 $210,000 $80,000 5 $240,000 $30,000