Bennet Inc. uses the net present value method to evaluate capital projects. Bennet’s required rate of return is 10%.

Bennet is considering two mutually exclusive projects for its manufacturing business. Both projects require an initial outlay of $120,000 and are expected to have a useful life of four years. The projected after-tax cash flows associated with these projects are as follows:

Year Project X Project Y 1 $40,000 $10,000 2 40,000 20,000 3 40,000 60,000 4 40,000 80,000 Total $160,000 $170,000 Assuming adequate funds are available, which of the following project options would you recommend that Bennet’s management undertake?

a. Project X only.

b. Project Y only.

c. Projects X and Y.

d. Neither project.