Question: Consider the following two mutually exclusive projects: Initial Net Cash Flow Per Year Outlay 1 2 3 4 Project X $8,000 $4,400 $4,400 $4,400 $4,400

Consider the following two mutually exclusive projects:

Initial Net Cash Flow Per Year

Outlay 1 2 3 4

Project X $8,000 $4,400 $4,400 $4,400 $4,400

Project Y $8,000 $0 $15,000

Notice that Project X has a 4 year life span while Project Y has only a 2 year life span.

A) Calculate the NPV, IRR, and EAA for each of these two projects, assuming a 10% discount rate.

B) Use your calculations to clearly explain which project should be undertaken.

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