Question: Please provide the clear answer Manager Cafe Daiton is considering investing in 2 (two) projects. Project X is a $ 75,000 investment to replace a
Manager Cafe "Daiton" is considering investing in 2 (two) projects. Project X is a $ 75,000 investment to replace a functioning cooling equipment but an outdated / outdated model. Project Y is a $ 150,000 investment to expand the dining room facilities. Relevant cash flow (cash flow) data for the two projects over the expected 2 years are as follows: Project X Year 1 Year 2 Probability Cash Flow Probability Cash Flow 0.16 $0 0.08 $0 0.66 50000 0.82 50000 0.18 100000 0.10 100000 Project Y Year 1 Year 2 Probability Cash Flow Probability Cash Flow 0.50 $0 0.13 $0 0.50 200000 0.74 100000 0.13 200000 a. Calculate: Expected value, standard deviation, and coefficient of variation for cash flows from each project b. Compute: Risk-adjusted NPV for each project using a cost of capital of 15% for riskier projects, and 12% cost of capital for less risky projects. Which project is more profitable using the NPV criteria? c. Calculate: PI for each project, and rank the projects according to the PI criteria. d. Calculate: IRR for each project, and rank the projects according to the IRR criteria. e. Compare your answers to b, c, and d, and discuss any differences. Manager Cafe "Daiton" is considering investing in 2 (two) projects. Project X is a $ 75,000 investment to replace a functioning cooling equipment but an outdated / outdated model. Project Y is a $ 150,000 investment to expand the dining room facilities. Relevant cash flow (cash flow) data for the two projects over the expected 2 years are as follows: Project X Year 1 Year 2 Probability Cash Flow Probability Cash Flow 0.16 $0 0.08 $0 0.66 50000 0.82 50000 0.18 100000 0.10 100000 Project Y Year 1 Year 2 Probability Cash Flow Probability Cash Flow 0.50 $0 0.13 $0 0.50 200000 0.74 100000 0.13 200000 a. Calculate: Expected value, standard deviation, and coefficient of variation for cash flows from each project b. Compute: Risk-adjusted NPV for each project using a cost of capital of 15% for riskier projects, and 12% cost of capital for less risky projects. Which project is more profitable using the NPV criteria? c. Calculate: PI for each project, and rank the projects according to the PI criteria. d. Calculate: IRR for each project, and rank the projects according to the IRR criteria. e. Compare your answers to b, c, and d, and discuss any differences
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