The required rate of return for two projects your firm is considering is 9%. The following estimates
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The required rate of return for two projects your firm is considering is 9%. The following estimates of expenditures and cash flows have been submitted for your review.
Project X | Project Y | |
Year0 | ($250,000) | ($100,000) |
Year1 | 0 | 55,000 |
Year2 | 0 | 55,000 |
Year3 | 0 | 55,000 |
Year4 | 0 | 55,000 |
Year5 | 500,000 | 0 |
Based on this information, using NPV of the projects, which project do you recommend to the Board of directors?
a. | Project X | |
b. | Project Y | |
c. | Project X and Y are indifferent, so either one is fine | |
d. | Neither one |
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