Capital Budgeting Techniques Analyze the two independent projects, X and Y. Each project costs $10,000, and the firm’s required rate of return is 12%. The expected net cash flows are as follows: OutflowsInflowsProjectsYear1234X-10,0006,5003,0003,0001,000Y-10,0003,5003,5003,5005,500 Required: Calculate for each project: Payback PeriodIRRNPVPI Give your decision regarding acceptation and rejection of the project. Explain which criteria you based your decision upon and why?

Capital projects are spread across multiple years. Financial viability of the capital projects could…

Answered: Analyze the two independent projects, X…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2PA

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Capital Budgeting Techniques

Analyze the two independent projects, X and Y. Each project costs $10,000, and the firm’s required rate of return is 12%. The expected net cash flows are as follows:

	Outflows	Inflows
Projects	Year	1	2	3	4
X	-10,000	6,500	3,000	3,000	1,000
Y	-10,000	3,500	3,500	3,500	5,500

Required: Calculate for each project:

Payback Period
IRR
NPV
PI

Give your decision regarding acceptation and rejection of the project. Explain which criteria you based your decision upon and why?

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