Question: Precision Instruments is considering two mutually exclusive projects, X and Y. The following details are made available to you: Project X Project Y Project cost

Precision Instruments is considering two mutually exclusive projects, X and Y. The following details are made available to you:
Project X Project Y
Project cost 700 700
Cash inflows: Year 1 100 500
Cash inflows: Year 2 200 400
Cash inflows: Year 3 300 200
Cash inflows: Year 4 450 100
Cash inflows: Year 5 600 100
Assume no residual values at the end of the fifth year. The firm's cost of capital is 10%. Calculate for each of the two projects: (i) Net present value, using 10% discounting (ii) Internal rate of return (iii) Profitability index.

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