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Using an EXCEL spreadsheet and showing formulas***

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 opportunity 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 6,500

2 3,000 3,000

3 3,000 3,000

4 1,000 3,000

a. Calculate each project’s payback, NPV, and IRR. b. Which project (or projects) is financially acceptable? Explain your answer.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92072420

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