A company has $200 000 to be invested on either project X or project Y with...

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A company has $200 000 to be invested on either project X or project Y with the following cash flows: Year Project X Project Y 1 2 3 4 5 $70 000 $10 000 $70 000 $30 000 $70 000 $60 000 $70 000 $132 000 $70 000 $40 000 The current cost of capital is 12% Required a) Calculate for each project the: i. Simple payback period Marks) ii. Discounted payback period Marks) iii. Net present value Marks) iv. Internal rate of return Marks) v. Profitability index Marks) b) Based on your results in (a) above, advice the firm. (6 Marks) (4 (6 (4 (10 (10 A company has $200 000 to be invested on either project X or project Y with the following cash flows: Year Project X Project Y 1 2 3 4 5 $70 000 $10 000 $70 000 $30 000 $70 000 $60 000 $70 000 $132 000 $70 000 $40 000 The current cost of capital is 12% Required a) Calculate for each project the: i. Simple payback period Marks) ii. Discounted payback period Marks) iii. Net present value Marks) iv. Internal rate of return Marks) v. Profitability index Marks) b) Based on your results in (a) above, advice the firm. (6 Marks) (4 (6 (4 (10 (10

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SOLUTION To calculate the financial metrics for projects X and Y we will use the given cash flows an... View the full answer