Question: 1. Consider two mutually exclusive projects X and Y with identical initial outlays of $600,000 and useful lives of 5 years. Project X is expected

1. Consider two mutually exclusive projects X and Y with identical initial outlays of $600,000 and useful lives

of 5 years. Project X is expected to produce cash flows of $180,000 each year. Project Y is

expected to generate a single cash flow of $1,015,000 in year 5. The discount rate is 14 percent.

Calculate the net present value for each project.

2. Why should a company proceed with a project if the net present value is $0?

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