Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments Project X and Project Y. Each project requires a net investment outlay of $10,000, and the cost of capital for each project is 12 percent. The projects' expected net cash flows are as follows:
Year------Project X ------Project Y
0------$10,000------------$10,000
1-------6,500---------------3,000
2-------3,000---------------3,000
3-------3,000---------------3,000
4-------1,000---------------3,000
a. Calculate each project's payback period, net present value (NPV).
b. Which project or projects is financially acceptable? Explain your answer.