Financial Management
-Capital Budgeting
You are evaluating two mutually exclusive projects with the following net cash flows:
Project XÂ Â Â Project Y
YearCash FlowCash Flow
0Â Â Â Â Â Â -$1000Â Â Â Â Â -$1100
1Â Â Â Â Â Â Â Â 100Â Â Â Â Â Â 1000
2Â Â Â Â Â Â Â Â 300Â Â Â Â Â Â 100
3Â Â Â Â Â Â Â Â 400Â Â Â Â Â 150
4Â Â Â Â Â 700Â Â Â Â Â Â 50
The cost of capital is 12 percent.
1.What is each projectâs payback period? If the cutoff period is 3 year, then which project would you choose?
2.What is each projectâs discounted payback period? If the cutoff period is 3 year, then which project would you choose?
3.   What is each projectâs NPV? Which project would you choose based on NPV rule?
4.   What is each projectâs IRR? Which project would you choose based on IRR rule?
5.   What is each projectâs profitability index? Based on profitability index, which project is preferred?
6.   What is each projectâs equivalent annual annuity (EAA)? Based on EAA, which project is preferred?
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A GOOD DISCOUNT 
