Q.2. You must analyze two projects, X and Y. Each project costs $10,000, and the firm's WACC is 12%. The expected cash flows as follows: Project X Project Y 0 -$10,000 -$10,000 $6,500 $3,500 2 $3,000 $3,500 3 $3,000 $3,500 4 $1,000 $3,500 a. Calculate each project's NPV. b. According to NPV method, which project(s) should be accepted, and why?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Q.2. You must analyze two projects, X and Y. Each project costs $10,000, and the firm's WACC is
12%. The expected cash flows as follows:
Project X
Project Y
0
-$10,000
-$10,000
$6,500
$3,500
2
$3,000
$3,500
3
$3,000
$3,500
4
$1,000
$3,500
a. Calculate each project's NPV.
b. According to NPV method, which project(s) should be accepted, and why?
Transcribed Image Text:Q.2. You must analyze two projects, X and Y. Each project costs $10,000, and the firm's WACC is 12%. The expected cash flows as follows: Project X Project Y 0 -$10,000 -$10,000 $6,500 $3,500 2 $3,000 $3,500 3 $3,000 $3,500 4 $1,000 $3,500 a. Calculate each project's NPV. b. According to NPV method, which project(s) should be accepted, and why?
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