Frazier Fudge, Inc. is considering 2 mutually exclusive projects with the following cash flows. Which project should be accepted? Assume a cost of capital of 10%. $\begin{array}{lll}
\text { Years } & \text { Project } X & \text { Project } Y \
0 & (\$ 350) & (\$ 350) \
1 & \$ 130 & \$ 200 \
2 & \$ 150 & \$ 120 \
3 & \$ 180 & \$ 120
\end{array}$

Question

Quizplus · Accepted Answer

Project X should be accepted because it has a higher NPV than Project Y. The NPV of Project X is $27.4, while the NPV of Project Y is $31. However, the IRR of Project X is 13.7%, which is higher than the IRR of Project Y, which is 12.2%. Therefore, Project X should be accepted.

Frazier Fudge, Inc A) Project X Because NPV Is $27