Chapter 26, Problem 2CMA

Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of $150,000 and will operate for five years. The cash flows associated with these projects are as follows:

Staten’s required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten?

1. a. Accept Project X and reject Project Y.
2. b. Accept Project Y and reject Project X.
3. c. Accept Projects X and Y.
4. d. Reject Projects X and Y.