Question
You are evaluating two independent projects with the following cash flows: Year Project X Project Y 0 -$5,000,000 -$3,000,000 1 $1,500,000 $1,000,000 2 $2,000,000 $1,200,000
You are evaluating two independent projects with the following cash flows:
Year | Project X | Project Y |
0 | -$5,000,000 | -$3,000,000 |
1 | $1,500,000 | $1,000,000 |
2 | $2,000,000 | $1,200,000 |
3 | $2,500,000 | $1,500,000 |
4 | $3,000,000 | $2,000,000 |
a. Calculate the NPV of each project using a discount rate of 12%. b. Determine the profitability index for each project. c. Identify which project is better based on NPV. d. Should both projects be accepted if they are independent?
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Intermediate Algebra
Authors: Margaret Lial, John Hornsby, Terry McGinnis
13th Edition
0134895983, 978-0134895987
