Mulroney Corp

question 45

Multiple Choice

Mulroney Corp.is considering two mutually exclusive projects.Both require an initial investment of $10,800 at t = 0.Project X has an expected life of 2 years with after-tax cash inflows of $6,600 and $7,400 at the end of Years 1 and 2,respectively.In addition,Project X can be repeated at the end of Year 2 with no changes in its cash flows.Project Y has an expected life of 4 years with after-tax cash inflows of $4,300 at the end of each of the next 4 years.Each project has a WACC of 8%.Using the replacement chain approach,what is the NPV of the most profitable project? Do not round the intermediate calculations and round the final answer to the nearest whole number.

• A) $3,442
• B) $3,718
• C) $3,408
• D) $3,339
• E) $2,960

---

Definitions:

Personal Transactions

Financial activities that are not related to the business and pertain to the personal dealings of an individual or owner.

Owners

Refers to individuals or entities that have legal ownership and control over a business or property.

Depreciable Asset

A tangible or intangible asset subject to depreciation, representing its loss in value over time due to usage or obsolescence.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset over its useful life, reducing its initial cost to its current book value.