You are evaluating two mutually exclusive projects with the following net cash flows:

Project X Project Y

Year Cash Flow Cash Flow

0 -$1000 -$1100

1 100 1000

2 300 100

3 400 150

4 700 50

The cost of capital is 12 percent.

What is each projects payback period? If the cutoff period is 3 year, then which project would you choose?

What is each projects discounted payback period? If the cutoff period is 3 year, then which project would you choose?

What is each projects NPV? Which project would you choose based on NPV rule?

What is each projects IRR? Which project would you choose based on IRR rule?

What is each projects profitability index? Based on profitability index, which project is preferred?

What is each projects equivalent annual annuity (EAA)? Based on EAA, which project is preferred?