You are considering three independent projects, Project X , Project Y, and Project Z. Given the following cash-flow information:

Project X Project Y Project Z

Initial outlay -$1,000 -$10,000 -$5,000

Inflow year 1 600 5,000 1,000

Inflow year 2 300 3,000 1,000

Inflow year 3 200 3,000 2,000

Inflow year 4 100 3,000 2,000

Inflow year 5 500 3,000 2,000

1a. Calculate the payback period for each project (show calculations or tables)

ANSWERS:

1b. Calculate the discounted payback period for each project using a rate of return of 10%. (Show calculations or tables)

ANSWER:

1c. Calculate the net present value of each project using a required rate of return of 12%. (Show calculations or tables)

ANSWER:

1d. Based on your results, which project would you choose and why?

ANSWER: