Suppose, your company is considering two mutually exclusive projects, X and Y whose costs and cash flows are shown below. Assume that the projects are equally risky, and their cost of capital is $8\%.$

Year

Project X

Project Y

$0$

$$(5,000)$

$$(5,000)$

$1$

$1,000$

$4,500$

$2$

$1,500$

$1,500$

$3$

$2,000$

$1,000$

$4$

$4,000$

$500$

What are the net present value of both Project X $($NPVX$)$ and Project Y $($NPVY$)?$ If projects are mutually exclusive, which project do you accept?

Question $10$ options:

NPVX $=$ $$1054$; NPVY $=$$$1243$; Accept Project Y$.$

NPVX $=$ $$1740$; NPVY $=$$$1614$; Accept Project X$.$

NPVX $=$ $$1383$; NPVY $=$$$1423$; Accept Project Y$.$

NPVX $=$ $$1140$; NPVY $=$$$1243$; Reject both Project X and Project Y$.$