Question: Suppose there are two projects X and Y. Each involves an investment of K 82, 000. The expected cash inflows (risk free cash inflows

Suppose there are two projects X and Y. Each involves an investment

Suppose there are two projects X and Y. Each involves an investment of K 82, 000. The expected cash inflows (risk free cash inflows and risk cash flows) are given as follows: Year 1 2 3 Project X Risk free cash inflows 40,000 35,000 30,000 Risky Cash flows Project Y Risk free cash inflows 80,000 35,000 65,000 30,000 55,000 30,000 Risky Cash flows 90,000 70,000 60,000 Using certainty equivalent method, which of the two projects should be selected?

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