A Firm Is Considering Two Mutually Exclusive Projects with the Following

Multiple Choice

A firm is considering two mutually exclusive projects with the following cash flows: $$\begin{array} { l r r } & \text { Project X } & \text { Project Y } \\\text { Year 1 } & \$ 40,000 & \$ 120,000 \\\text { Year 2 } & 80,000 & 80,000 \\\text { Year 3 } & 120,000 & 40,000\end{array}$$ Each project requires an investment of $100,000. The cost of capital is 10 percent. Which project will have the higher net present value?

A) Project X
B) Project Y
C) Project X and Project Y will have the same net present value.
D) It is not possible to answer the question based upon the information provided.