Answer to Question #318149 in Management for Jack

Question

Enterprises is considering investing in either of the two mutually exclusive projects X and Y. Project X requires an initial investment of Rs. 230,000, project Y requires Rs. 40,000. Each projects cash inflows are 5 year annuities; project X’s inflows are Rs. 10,000 per year and project Y’s are Rs. 15,000. The firm has unlimited funds and in the absence of risk differences, accepts the project with the highest NPV. The cost of capital is 15%.a. Find the NPV of each project, are the projects acceptable 

Answer 1

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