You are retained as a financial consultant by Small retail outlet analyse to two proposed capital Investment projects: Project X and Project Y. Each project. has a cost of $10,000 and the cost of capital for each is 12%. Each project's net cash flows follows

Expected net cash flow

Year project x project y

0. (10 000) (10 000)

1. 6500 3 500

2. 3000. 3500

3. 3000. 3500

a) Calculate each projects npv

b) Calculate each project's nominal payback period

c) Calculate each project PI

d) Should both projects be accepted if they independent. Why? Why not?

Answer rating: 100% (QA)

To calculate the NPV nominal payback period and PI for each project we need to discount the net cash flows using the cost of capital of 12 Lets calcul... View the full answer