Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of $150,000 and will operate for five years. The cash flows associated with these projects are as follows:

Staten’s required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten?

a. Accept Project X and reject Project Y.

b. Accept Project Y and reject Project X.

c. Accept Projects X and Y.

d. Reject Projects X and Y.

Transcribed Image Text:

Project X $ 47,000 Year Project Y 2 47,000 47,000 47,000 4 280,000 $280,000 5 47,000 Total $235,000