Your company is considering two mutually exclusive projects. X1 and X2; also considered are 2 projects, Y and Z. Independant of the X projects and
Your company is considering two mutually exclusive projects. X1 and X2; also considered are 2 projects, Y and Z. Independant of the X projects and each other. The project costs and the cash flows are shown below.
| Years | X1 | X2 | Y | Z |
| 0 | -$2000 | -$2000 | -$15000 | -$25000 |
| 1 | 200 | 2000 | 5000 | 8500 |
| 2 | 600 | 200 | 5000 | 8500 |
| 3 | 800 | 100 | 5000 | 8500 |
| 4 | 1400 | 75 | 5000 | 8500 |
Projects X1 and X2 are equally risky, and the firms required rate of return is 12%. Which project should be accepted and which should be rejected? Please base your decision on any method, but justify the use of the method you have choosen.
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Answer X1 X2 Y Z Particulars Time PVF 12 Amount PV Amount PV Amount PV Amount PV Cash flow 0 1 2...
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Authors: Eugene F. Brigham, Phillip R. Daves
12th edition
1285850033, 978-1305480698, 1305480694, 978-0357688236, 978-1285850030
