Reference no: EM132543789

1 "capital budgeting" and describe methods used in capital budgeting shortly.

2. You must analyze two projects, X and Y. Each project costs $12,000, and the firm's WACC is 15%. The expected cash flows are as follows:

Project X($)                  Project Y($)

-12.000                          -12.000

2700                                  1500

3000                                  4200

3000                                 2500

1000                                 3750

5500                                2500

6700                               7000

Question a. Calculate each project's NPV. Which project(s) should be accepted, if they are independent? Which project(s) should be accepted if they are mutually exclusive?

Question b. Calculate each project's Payback. Which project should be accepted if they are mutually exclusive and why ?

Question c. Calculate each project's Discounted Payback. Which project should be accepted if they are mutually exclusive and why?