Question
The required rate of return for two projects your firm is considering is 9%. The following estimates of expenditures and cash flows have been submitted
The required rate of return for two projects your firm is considering is 9%. The following estimates of expenditures and cash flows have been submitted for your review.
| Project X | Project Y | |
| Year0 | ($250,000) | ($100,000) |
| Year1 | 0 | 55,000 |
| Year2 | 0 | 55,000 |
| Year3 | 0 | 55,000 |
| Year4 | 0 | 55,000 |
| Year5 | 500,000 | 0 |
Based on this information, using NPV of the projects, which project do you recommend to the Board of directors?
| a. | Project X | |
| b. | Project Y | |
| c. | Project X and Y are indifferent, so either one is fine | |
| d. | Neither one |
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Advanced Accounting
Authors: Gail Fayerman
1st Canadian Edition
9781118774113, 1118774116, 111803791X, 978-1118037911
