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You are a financial analyst for a company. The director of capital budgeting has asked you to analyze the following capital investment projects (i.e., Projects
You are a financial analyst for a company. The director of capital budgeting has asked you to analyze the following capital investment projects (i.e., Projects X and Y). The cost of capital for each project is 12%, and the projects expected net cash flows are shown the table below:
1. Calculate each projects Net Present Value (NPV).
2. Calculate each projects Internal Rate of Return (IRR)
3. Calculate each projects Profitability Index (PI).
Expected Net Cash Flows Year Project X Project Y 0 $10,000 6,500 3,000 3,300 1,000 $10,000 3,500 3,500 3,500 3,500 4Step by Step Solution
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