Mulroney Corp.is considering two mutually exclusive projects.Both require an initial investment of $10,800 at t = 0.Project X has an expected life of 2 years with after-tax cash inflows of $6,600 and $7,400 at the end of Years 1 and 2,respectively.In addition,Project X can be repeated at the end of Year 2 with no changes in its cash flows.Project Y has an expected life of 4 years with after-tax cash inflows of $4,300 at the end of each of the next 4 years.Each project has a WACC of 8%.Using the replacement chain approach,what is the NPV of the most profitable project? Do not round the intermediate calculations and round the final answer to the nearest whole number.
A) $3,442
B) $3,718
C) $3,408
D) $3,339
E) $2,960

Question

Quizplus · Accepted Answer

? 11ea856c_8b92_d753_9aec_2f7e82933671_TB1222_00 ?
Project X,extended NPV = 0$2,852
? 11ea856c_8b92_fe64_9aec_c968028a2769_TB1222_00 ?
Project Y,NPV = 0$3,535.78
?
NPV of most profitable project,Project Y = $3,442 >> 0$543.
?
?