Question

As the director of capital budgeting for Denver Corp., you are
evaluating two mutually exclusive projects with the following net
cash flows:

Project
X Project
Z

Year Cash
Flow Cash
Flow

0 -$100,000 -$100,000

1 50,000 10,000

2 40,000 30,000

3 30,000 40,000

4 10,000 60,000

If Denver’s cost of capital is 15 percent, which project would you
choose?

Neither project. |
||

Project X, since it has the higher IRR. |
||

Project Z, since it has the higher NPV. |
||

Project X, since it has the higher NPV. |
||

Project Z, since it has the higher IRR. |

please help!!

Answer #1

**SEE THE IMAGE. ANY DOUBTS,
FEEL FREE TO ASK. THUMBS UP PLEASE**

**WHEN PROJECTS ARE MUTUALLY
EXCLUSIVE, WE PREFER THE PROJECT WITH HIGHEST POSITIVE NPV. HERE
BOTH PROJECT HAVE NEGATIVE NPV.**

**SO NONE OF THEM IS TO BE
SELECTED**

5. As the director of capital budgeting for Bissett
Corporation, you are evaluating two
mutually exclusive projects (you can
only choose one) with the following cash flows. The
discount rate is 15%.
Year
Project X
Project Y
0
- 100,000
- 100,000
1
50,000
10,000
2
40,000
30,000
3
10,000
40,000
4
10,000
30,000
Which project would you choose?
a. Project X since it has
higher IRR
b. Project Y since it has
higher NPV
c. Project X since it has
higher NPV
d. Neither project

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you are evaluating two
mutually exclusive projects (you can
only choose one) with the following cash flows. The discount rate
is 15%.
Year
Project X
Project Y
0
- 100,000
- 100,000
1
50,000
10,000
2
40,000
30,000
3
10,000
40,000
4
10,000
30,000

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Project 1
Project 2
0
-$1,292,224
-$1,321,796
1
238,000
384,000
2
329,000
384,000
3
430,000
384,000
4
504,000
384,000
5
800,000
384,000
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Project B
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