PQR Inc is evaluating two mutually exclusive projects, Project X and Project Y Each project requires an initial investment of $200,000 The expected cash flows are as follows Year Project X (USD) Project Y (USD) 0 (200,000) (200,000) 1 60,000 40,000 2 70,000 60,000 3 80,000 80,000 4 90,000 100,000 5 100,000 120,000 Requirements a Calculate the NPV for both projects assuming a discount rate of 10 b Determine the payback period for both projects c Recommend which project should be selected based on NPV and why

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Question: PQR Inc. is evaluating two mutually exclusive projects, Project X and Project Y. Each project requires an initial investment of $200,000. The expected cash flows

PQR Inc. is evaluating two mutually exclusive projects, Project X and Project Y. Each project requires an initial investment of $200,000. The expected cash flows are as follows:

Year	Project X (USD)	Project Y (USD)
0	(200,000)	(200,000)
1	60,000	40,000
2	70,000	60,000
3	80,000	80,000
4	90,000	100,000
5	100,000	120,000

Requirements: a. Calculate the NPV for both projects assuming a discount rate of 10%. b. Determine the payback period for both projects. c. Recommend which project should be selected based on NPV and why.

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