題組內容

2. (20 points, 10 points for each) A company is evaluating two mutually exclusive investment projects, Project X and Project Y. The expected cash flows (in millions of dollars) are given below. The firm's cost of capital is 12%.

(b) Calculate the Discounted Payback Period for Projects X and Y. If the project rankings differ from those implied by the NPV criterion, which criterion should the company rely on when making its investment decision? Briefly explain.