You are analyzing two mutually exclusive projects with the following cash flows:YearProject XProject Y0-$3,000,000-$3,500,0001$1,200,000$1,500,0002$1,500,000$1,700,0003$1,300,000$1,200,0004$800,000$1,800,000a. Calculate...
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Accounting
You are analyzing two mutually exclusive projects with the following cash flows:
Year | Project X | Project Y |
0 | -$3,000,000 | -$3,500,000 |
1 | $1,200,000 | $1,500,000 |
2 | $1,500,000 | $1,700,000 |
3 | $1,300,000 | $1,200,000 |
4 | $800,000 | $1,800,000 |
a. Calculate the NPV of each project assuming a cost of capital of 12%. Which project is more profitable? b. Determine the IRR of each project. c. Identify which project should be selected based on NPV and IRR. d. Discuss any non-financial factors that should be considered before making the decision.
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