You are a financial analyst of ABC Company. The director of capital budgeting has asked you to analyze two proposed capital investments, projects X and Y. Each project has a cost of Tk. 30,000 and the expected net cash flows are as follows:

Expected Net Cash Flows

Year Project X Project Y

1. Tk. (30000) Tk. (30,000)
2. 8000 8500
3. 12000 8500
4. 18000 8500
5. 21000 8500

1. Calculate the pay-back period for each project (Industry standard is 3.5 years)
2. If the required rate of return is 12 % then calculate the NPV for each project.
3. Calculate the profitability index for these projects.
4. Would you accept the project if they are independent?
5. Which project should be accepted if they are mutually exclusive?