2. Your client is evaluating two mutually exclusive projects, X and Y. The cost of capital is 12%, and expected cash flows of the two projects are as follows: 0 5 Year Project X Project Y -$1,200 -$1,200 1 250 320 2 290 500 3 460 450 4 470 270 510 260 What is the payback period of the better project? (8 marks) 3. A firm that your client would like to invest is only accepts projects providing an IRR more than 15%. The company is evaluating an eight-year project that requires $74,515 in initial investment and provides $15,000 in annual net cash inflows. (a) What is the IRR of the project? Is it acceptable? (b) Assuming the annual net cash inflows continue to be $15,000, how many additional years would the flows continue in order to make the project acceptable (that is, to have an IRR of 15%)? (c) With the given project life (8 years) and initial investment, what is the minimum annual net cash inflows in order to make the project acceptable? (8 marks)