Question: Question 3 Consider the following information for Project X and Project Y: Year Project X Project Y 0 -60000 -130000 1 15000 25000 2 20000

Question 3

Consider the following information for Project X and Project Y:

Year

Project X

Project Y

0

-60000

-130000

1

15000

25000

2

20000

30000

3

25000

35000

4

30000

40000

5

35000

45000

6

40000

50000

Requirements:

  1. Calculate the NPV for both projects using an 8% discount rate.
  2. Determine the IRR for each project.
  3. Calculate the traditional payback period for both projects.
  4. Analyze and explain which project(s) should be selected if they are independent.
  5. Analyze and explain which project should be selected if they are mutually exclusive.

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