Which project is financially acceptable

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Reference no: EM13914690

Assume that you are the chief financial officer 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 opportunity cost of capital for each project is 12 percent. The projects’ 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

a. Calculate each project’s payback, NPV and IRR Insert your response here.

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

Reference no: EM13914690

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