A firm is considering two mutually exclusive projects with the following cash flows: $$\begin{array} { l r r }
& \text { Project X } & \text { Project Y } \
\text { Year 1 } & \$ 40,000 & \$ 120,000 \
\text { Year 2 } & 80,000 & 80,000 \
\text { Year 3 } & 120,000 & 40,000
\end{array}$$ Each project requires an investment of $100,000. The cost of capital is 10 percent. Which project will have the higher net present value?

Question

A firm is considering two mutually exclusive projects with the following cash flows: $$\begin{array} { l r r } 
& \text { Project X } & \text { Project Y } \
\text { Year 1 } & \$ 40,000 & \$ 120,000 \
\text { Year 2 } & 80,000 & 80,000 \
\text { Year 3 } & 120,000 & 40,000
\end{array}$$ Each project requires an investment of $100,000. The cost of capital is 10 percent. Which project will have the higher net present value?

Quizplus · Accepted Answer

The Answer of A firm is considering two mutually exclusive projects with the following cash flows: $$\begin{array} { l r r } 
& \text { Project X } & \text { Project Y } \
\text { Year 1 } & \$ 40,000 & \$ 120,000 \
\text { Year 2 } & 80,000 & 80,000 \
\text { Year 3 } & 120,000 & 40,000
\end{array}$$ Each project requires an investment of $100,000. The cost of capital is 10 percent. Which project will have the higher net present value?

A Firm Is Considering Two Mutually Exclusive Projects with the Following