a. If a 10% cost of capital is appropriate for both projects, what are their NPVs?  b. Which project(s) would you accept if X and Y are (1) independent or (2) mutually exclusive?

 

Example *The cash flows for Projects X and Y are as follows: X Y 0 End-of-Year Cash Flows 1 2 -$700 $500 $300 -$700 $100 $300 3 $100 $600 WACC =r= 10% a. What are the projects' IRRs? *b. Which project(s) would the IRR method select if the projects were (1) independent or (2) mutually exclusive? 10-51