Project X = 11% Discount Rate and Project Y = 12%

Question 1 JTR Manufacturing is considering two (2) mutually exclusive investments. The company wishes to use a CAPM-Type risk-adjusted discount rate (RADR) in its analysis. JTR's managers believe that the appropriate market rate of return is 10%, and they observe that the current risk-free rate of return is 5%. Cash flows associated with the two (2) projects are shown in the table below YEAR 1 Project X ($110,000) Project Y ($120,000) NET CASH INFLOWS (NCF.) $65,000 $35,000 $80,000 $38,000 $43,000 $56,000 2 3 4 i. Calculate the Net Present Value (NPV) of each project and rank them (6 marks) Calculate the Annualized Net Present Value (ANPV) of the two projects and rank them. ii. (6 marks) Why is ANPV preferred over NPV when ranking projects with unequal lives? (3 marks) END OF ASSIGNMENT PIC.COLLAGE