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The following information is related to two proposed capital investment projects, projects X and Y. Each project has a cost of 10,000 and the cost

The following information is related to two proposed capital investment projects, projects X and Y. Each project has a cost of 10,000 and the cost of capital for both projects is 12%. The projects expected net cash flows are as follows:

Year Project X Project Y
0 (10,000) (10,000)
1 6,500 3,500
2 3,000 3,500
3 3,000 3,500
4 1,000 3,500

Required:

A: Calculate each projects nominal payback period, net present value (NPV), internal rate of return (IRR) [18% for project X], and profitability index (PI).

B: Should both projects be accepted if they are interdependent?

C: Which project should be accepted if they are mutually exclusive?

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