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Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Time 0 X Y 1
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Time 0 X Y 1 -$2,000 200 -$2,000 2,000 234 600 200 800 100 4 1,400 75 1. What is the payback period for Project A and B? Which would be chosen and why? 2. If the cost of capital is 10%, what is the discounted payback period for Project A and B? Which would be chosen and why? 3. If the required rate of return on these projects is 10 percent, what are the NPV for Project A and B? Which would be chosen and why? 4. Calculate the profitability index for each project. 5. What is the IRR of both projects? Defe nd yo
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