Given the following cash +pws for project X and project Y, Year Project X Project Y -62000 -105000 1 27000 10000 2 13500 18000 11000 22000 4 10000 25000 9000 32000 7500 40000 a. Calculate the NPV, IRR, and traditional payback period for each project, assuming a required rate of return of 8 percent. b. If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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2. Given the following cash +bws for project X and project Y,
Project Y
Year
Project X
-62000
-105000
1
27000
10000
2
13500
18000
3
11000
22000
4
10000
25000
9000
32000
7500
40000
a. Calculate the NPV, IRR, and traditional payback period for each project, assuming a required
rate of return of 8 percent.
b. If the projects are independent, which project(s) should be selected? If they are mutually
exclusive, which project should be selected?
Transcribed Image Text:2. Given the following cash +bws for project X and project Y, Project Y Year Project X -62000 -105000 1 27000 10000 2 13500 18000 3 11000 22000 4 10000 25000 9000 32000 7500 40000 a. Calculate the NPV, IRR, and traditional payback period for each project, assuming a required rate of return of 8 percent. b. If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected?
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