You are a financial analyst for Damon Electronics Company. The director of capital budgeting has asked you to analyze two proposed capital investments, project X and project Y. Each project has a cost of $10,000, and the cost of capital for each project is 12%. The projects expected net cash flows are as follows:

Project X Project Y

Period Cash flows Cash flows

0 $10,000 $10,000

1 6,500 1,000

2 3,000 1,000

3 3,000 7,000

4 1,000 7,000

A.	Y, because it has higher IRR, which is also higher than the cost of capital, 12 percent.
	B.	X, because it has higher IRR, which is also higher than the cost of capital, 12 percent.
	C.	X, because it has higher NPV, which is also positive.
	D.	Both, because both projects have positive NPV and their IRRs are both higher than cost of capital, 12 percent.
	E.	Y, because it has higher NPV, which is also positive.