Table 11.11
Nico Manufacturing is considering investment in one of two mutually exclusive projects X and Y which are described below. Nico Manufacturing's overall cost of capital is 15 percent, the market return is 15 percent and the risk-free rate is 5 percent. Nico estimates that the beta for project X is 1.20 and the beta for project Y is 1.40. 
-Using the risk-adjusted discount rate method of project evaluation, find the NPV for projects X and Y. Which project should Nico select using this method? (See Table 11.11)
Definitions:
Unmet Customer Needs
Desires or requirements of consumers that are not being satisfied by current products or services on the market.
Differentiation
The process of distinguishing a product or service from others, to make it more attractive to a particular target market.
Existing Product
A product that is already available on the market and is not being introduced for the first time.
Hypothesizing
The process of forming a hypothesis, which is a proposed explanation made on the basis of limited evidence as a starting point for further investigation.
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