Calculate each projects payback period net present value, Ask an Expert

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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 project's expected net cash flows are:

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. find out each project's payback period, net present value (NPV), and internal rate of return (IRR).

b. Which project (or projects) is financially acceptable? describe your answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M941200

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