The CFO of Bogey Golf has been given the following information about two mutually exclusive investments:

The CFO normally uses a risk-adjusted required rate of return to evaluate such investments. The firms average required rate of return, which is 15 percent, is adjusted by 5 percent for high-risk projects, and it is adjusted by 3 percent for low-risk projects. Which project(s) should Bogey purchase?

Project X IRR = 14%. Risk Average

Project Y IRR = 19% Risk High