A Firm Is Considering Two Mutually Exclusive Projects with the Following

A firm is considering two mutually exclusive projects with the following cash flows: Project X Project Y
Year 1 $ 40,000 $120,000
Year 2 80,000 80,000
Year 3 120,000 40,000
Each project requires an investment of $100,000. The cost of capital is 10 percent.
Which project will have the higher net present value?

A) Project X
B) Project Y
C) Project X and Project Y will have the same net present value.
D) It is not possible to answer the question based upon the information provided.

Correct Answer:

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