You are a financial analyst at Beta Enterprises. The Director of Finance has asked you to evaluate three potential investment projects, Projects X, Y, and Z. Each project has an initial cost of $120,000, and the cost of capital for each project is 15 percent. The projects’ expected net cash flows are as follows:

Expected Net Cash Flows

Year	Project X	Project Y	Project Z
0	($120,000)	($120,000)	($120,000)
1	70,000	50,000	60,000
2	40,000	60,000	50,000
3	30,000	40,000	40,000
4	20,000	10,000	30,000

i) Calculate each project’s payback period, Net Present Value (NPV), and Internal Rate of Return (IRR).
 ii) Determine which project should be accepted if they are independent.
 iii) Identify which project should be accepted if they are mutually exclusive.
 iv) Discuss the advantages and disadvantages of using NPV over IRR for project evaluation.
 v) If the cost of capital changes to 12 percent, how does that impact the NPV and IRR for each project?