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Problem 2. A company is considering two projects: Project X and Project Y. Use the following information to answer the questions. Year 0 1 2
Problem 2. A company is considering two projects: Project X and Project Y. Use the following information to answer the questions. Year 0 1 2 3 4 5 Project X 4,000 3,000 -10,000 -10,000 4,000 3,000 3,000 2,000 3,000 5,000 Project Y 3,000 2,000 Assume that projects have a 10 percent cost of capital (WACC). a) Calculate payback period for both projects. Interpret. b) Calculate net present value (NPV) for both projects. Interpret. c) Calculate internal rate of return (IRR) for both projects. Interpret. d) Which project(s) should be accepted if they are independent? if they are mutually exclusive
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