Assume you are the Chief Financial Officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - Project X & Project Y.
Each project has a net investment outlay of $10,000 and the opportunity cost for each project is 12%.
You have calculated each project's payback, net present value & internal rate of return as follows:
Project X Project Y
Payback 6.72 years 4.82 years
NPV - $1,565 $6,267
IRR 9.6% 16.8%
Which project is financially acceptable.