A: Calculate each project's nominal payback period, net present value (NPV), internal rate of return (IRR) [18% for project X], and profitability index (PI). B: Should both projects be accepted if they are interdependent? C: Which project should be accepted if they are mutually exclusive?
A: Calculate each project's nominal payback period, net present value (NPV), internal rate of return (IRR) [18% for project X], and profitability index (PI). B: Should both projects be accepted if they are interdependent? C: Which project should be accepted if they are mutually exclusive?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give solution in image format thanku
![The following information is related to two
proposed capital investment projects,
projects X and Y. Each project has a cost of
10,000 and the cost of capital for both
projects is 12%. The projects' expected net
cash flows are as follows:
Year Project X
(10,000)
6,500
3,000
O
1
2
3
4
3,000
1,000
Project Y
(10,000)
3,500
3,500
3,500
3,500
Required:
A: Calculate each project's nominal
payback period, net present value (NPV),
internal rate of return (IRR) [18% for project
X], and profitability index (PI).
B: Should both projects be accepted if they
are interdependent?
C: Which project should be accepted if they
are mutually exclusive?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fac69951b-8728-46ae-8bfb-4f439eaff53e%2F4189970a-a0d4-4dbb-becb-1854e2394702%2F7y3mf5n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following information is related to two
proposed capital investment projects,
projects X and Y. Each project has a cost of
10,000 and the cost of capital for both
projects is 12%. The projects' expected net
cash flows are as follows:
Year Project X
(10,000)
6,500
3,000
O
1
2
3
4
3,000
1,000
Project Y
(10,000)
3,500
3,500
3,500
3,500
Required:
A: Calculate each project's nominal
payback period, net present value (NPV),
internal rate of return (IRR) [18% for project
X], and profitability index (PI).
B: Should both projects be accepted if they
are interdependent?
C: Which project should be accepted if they
are mutually exclusive?
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