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ABC Electronics is planning to invest in a new line of products. The expected cash...

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Accounting

ABC Electronics is planning to invest in a new line of products. The expected cash flows are provided below. The company’s cost of capital is 10%.

Year

Project X

Project Y

0

-$100,000

-$120,000

1

$30,000

$40,000

2

$40,000

$50,000

3

$50,000

$60,000

4

$20,000

$30,000

a. Calculate the internal rate of return (IRR) for each project. b. Determine the net present value (NPV) and decide which project should be undertaken.

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