Question: Frazier Fudge, Inc. is considering 2 mutually exclusive projects with the following cash flows. Which project should be accepted? Assume a cost of capital of

Frazier Fudge, Inc. is considering 2 mutually exclusive projects with the following cash flows. Which project should be accepted? Assume a cost of capital of 10%.

Years

Project X

Project Y

0

($350)

($350)

1

$130

$200

2

$150

$120

3

$180

$120

a.

Project X because NPV is $27.4

b.

Project Y because NPV is $31

c.

Project X because IRR is 13.7%

d.

Project Y because IRR is 12.2%

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