Question: You are deciding to choose between three mutually exclusive projects. a. option1: project X will cost $5000 to install and $4200 a year to run

You are deciding to choose between three mutually exclusive projects.

a. option1: project X will cost $5000 to install and $4200 a year to run and will last for three years.

b. option 2: project Y will cost $6000 to install and $3800 a year to run and will last for four years.

c. option 3: project Z will cost $10,000 to install and $500 a year to run and will last forever.

Let the WACC = 0.08


Estimate the NPV of project X.

Answer for part 1

Estimate the equivalent annuity cost of project X.

Answer for part 2

Estimate the NPV of project Y.

Answer for part 3


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