ASSUME THAT YOU ARE THE CHEIF 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 E.
assume that you are the cheif 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 projest’s payback period, net present value(NPV), and internal rate of return(IR).
b. which project(or projects) is financially acceptable? explain your answer.
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 projest’s payback period, net present value(NPV), and internal rate of return(IR).
b. which project(or projects) is financially acceptable? explain your answer.
