Calculate each project payback period and net present value

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Capital Budgeting Question -

Assume that you are the CFO at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments: Project X and Project Y. Each project requires a net investment outlay of $10,000, and the cost of capital for each project is 12 percent. The project's expected net cash flows are as follows:

Year

Project X

Project Y

0

-$10,000

-$10,000

1

$6,500

$3,000

2

$3,000

$3,000

3

$3,000

$3,000

4

$1,000

$3,000

Required -

a. Calculate each project's payback period, net present value (NPV), and internal rate of return (IRR).

b. Which project (or projects) is financially acceptable? Explain your answer.

Reference no: EM132734739

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