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Determine the npv for both projects

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Reference no: EM131320121

Valley Care Medical Center expects Projects X and Y to generate the following cash flows:

 

Givens (in '000s)

Years                  0

1

2

3

4

5

1

Initial investment                              ($7,500)

 

 

 

2

Net operating cash flows for Project X

$7,000

$5,000

$3,000

$2,000

$1,500

3

Net operating cash flows for Project Y

$1,500

$2,000

$3,000

$5,000

$7,000

a. Determine the NPV for both projects using a cost of capital of 17 percent.

b. Determine the NPV for both projects using a cost of capital of 12 percent.

c. At a 12 percent discount rate, which project should be accepted? At a 17 percent discount rate, which project should be accepted? Explain.

Reference no: EM131320121

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