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