Delta company is evaluating two different capital

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Delta Company is evaluating two different capital investments, Project X and Y. Either X or Y would cost $100,000, and the company cannot afford to do both. The company expects that Project X would provide net cash inflows of $30,000 per year for 5 years. For Project Y, the net cash inflows are expected to be as follows:

Delta's cost of capital is 12%

Required:

1) Calculate the present value index for Project X and for Project Y.

2) Indicate whether each of the projects is an acceptable investment.

3) Which of the two projects should Delta implement.

Reference no: EM13480449

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