$2$uestion $80(0\mathrm{.}357143$ points$)$

An analyst has evaluated two mutually exclusive projects that have $3-$year lives. Project $x$ has an NPV of $$65,000,$ a payback period of $2\mathrm{.}3$ years, and an AAR of $10\mathrm{.}5$ percent. Project Y has an NPV of $$72,000,$ a payback period of $2\mathrm{.}6$ years, and an AAR of $8\mathrm{.}9$ percent. The required return for Project $x$ is $12$ percent while it is $13$ percent for Project Y$.$ Both projects have a required AAR of $8\mathrm{.}5$ percent. What outcome should the analyst recommend?

$$ Accept both projects because both NPVs are positive

$$ Accept Project X because it has the shortest payback period

$$ Accept Project $Y$ and reject Project $x$ based on their NPVs

$$ Accept Project $x$ and reject Project $Y$ based on their AARs

$$ Accept Project X because it has the lower required return