Find out the npv for both projects using a cost of capital

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Reference no: EM13478089

Castle Rock Medical Center expects Projects X and Y to generate the following cash flows:

NOCF = Net Operating Cash Flows

Givens

(thousands)

Years

0

1

2

3

4

5

Initial Investment

 

(6,500)

 

 

 

 

 

Project  X

NOCF

 

 

5,000

3,000

2,000

1,600

1,000

Project Y

NOCF

 

 

1,000

1,600

2,000

3,000

5,000

Discount rate for Part a

13%

 

 

 

 

 

 

Discount rate for Part b

8%

 

 

 

 

 

 

a. Determine the NPV for both projects using a cost of capital of 13%

b. Determine the NPV for both projects using a cost capital of 8%

c. At an 8% discount rate, which project should be accepted?

At a 13% discount rate, which project should be accepted? Explain.

Reference no: EM13478089

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