You are the financial analyst for the Theodore Roosevelt Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Project X and Y. Each project as a cost of $17,000 and the cost of capital for both projects is 10 percent. The projects' expected net cash flows are as follows:

Expected Net Cash Flow

Year Project X Project Y

0 ($17,000) ($17,000)

1 8,500 5,500

2 5,000 5,500

3 5,000 5,500

4 4,000 5,500

a. Calculate each project's payback, discounted payback, net present value, internal rate of return, modified internal rate of return, and profitability index.

b. Which project, or projects, should be accepted if they are independent?

c. Which project should be accepted if they are mutually exclusive?