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MBA560 Financial and Managerial Accounting Module 8 Problem 2 - Delta Company

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Question;MBA560 Financial and Managerial;Accounting;Module 8;Problem 2.;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;Year Cash inflows;Year 1 22,000;Year 2 24,000;Year 3 30,000;Year 4 38,000;Year 5 40,000;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?

 

Paper#37670 | Written in 18-Jul-2015

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