Pretest

Summary of answer:

NPV:

X = 9,363.8246

Y = 12,005.6982

If the project is independent: Accept X & Y

If the project is Mutually exclusive: Accept only Y since it has the highest NPV

PAYBACK PERIOD

X = 3.1 years

Y = 3.2 years

If the project is independent: it is not applicable in payback period

If the project is Mutually exclusive: Accept either X

Discounting Payback period

X = 3.55

Y = 4.07

If the project is independent: it is not applicable in discounting payback period

If the project is Mutually exclusive: accept project X because it has the small discounting period.