PROBLEM 3 (Based on 14.5) Assume that you are the CFO at Porter Memorial Hospital. The...

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PROBLEM 3 (Based on 14.5) Assume that you are the CFO 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 $545,000, and the cost of capital for each project is 4.5 percent. The projects' expected net cash flows are as follows: Year Project X Project Y X Cumulative 0 -545,000 -545,000 1 324,000 147,252 2 228,000 147,252 3 144,000 147,252 4 72,000 147,252 Y Cumulative Rate a. Calculate each project's payback period, net present value (NPV), and the internal rate of return (IRR). b. Which project is financially acceptable? Explain your answer. ANSWER a. Payback NPV IRR b. X Y Years PROBLEM 3 (Based on 14.5) Assume that you are the CFO 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 $545,000, and the cost of capital for each project is 4.5 percent. The projects' expected net cash flows are as follows: Year Project X Project Y X Cumulative 0 -545,000 -545,000 1 324,000 147,252 2 228,000 147,252 3 144,000 147,252 4 72,000 147,252 Y Cumulative Rate a. Calculate each project's payback period, net present value (NPV), and the internal rate of return (IRR). b. Which project is financially acceptable? Explain your answer. ANSWER a. Payback NPV IRR b. X Y Years