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X construction is considering two projects to develop. The estimated net cash flow from each project...

X construction is considering two projects to develop. The estimated net cash flow from each
project is as follows:

Project X Project Y
Year 1 110,000 75,000
Year 2 65,000 150,000
Year 3 100,000 60,000
Year 4 115,000 55,000
Year 5 35,000 60,000

Project requires an investment of $200,000. A rate of 15% has been selected for the NPV
analysis.
Requires to
a) Calculate Payback period, ARR, Net Present Value and Profitability Index
b) Which Project is to be recommended to develop based on NPV, Profitability Index,
Payback period and ARR? Suggest

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