You are a financial analyst for the Lin-Knicks Company. The director of capital budgeting has asked you to analyze two proposed capital investments. Projects X and Y. Each project has a cost of $10,000 and a 12% cost of capital. The projects' expected net cash flows are as follows:
Year Project X Project Y
0 -$10,000 -$10,000
1 6,500 3,500
2 3,000 3,500
3 3,000 3,500