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Assume that you are the chief financial officer at porter

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Reference no: EM13380695

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 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 period, net present value (NPV).

b. Which project or projects is financially acceptable? Explain your answer.

Reference no: EM13380695

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