Question
Consider the following two mutually exclusive projects: Initial Net Cash Flow Per Year Outlay 1 2...
Consider the following two mutually exclusive projects:
Initial Net Cash Flow Per Year
Outlay 1 2 3 4
Project X $8,000 $4,400 $4,400 $4,400 $4,400
Project Y $8,000 $0 $15,000
Notice that Project X has a 4 year life span while Project Y has only a 2 year life span.
A) Calculate the NPV, IRR, and EAA for each of these two projects, assuming a 10% discount rate.
B) Use your calculations to clearly explain which project should be undertaken.
Homework Answers
Answer #1
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