- CFA Exams
- CFA Level I Exam
- Topic 4. Corporate Issuers
- Learning Module 31. Capital Investments
- Subject 2. Investment Decision Criteria

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**CFA Practice Question**

Beaumont Bearings is analyzing two mutually exclusive projects with the following cash flows. Its cost of capital is 9%.

The NPV of projects X and Y are:

A. X: 6,320; Y: 5,648

B. X: 9,000; Y: 8,000

C. X: 7,339; Y: 2,752

**Explanation:**NPV

_{X}= -10,000 + 8,000/(1.09)

^{1}+ 7,000/(1.09)

^{2}+ 4,000/(1.09)

^{3}= 6,320

NPV

_{Y}= -5,000 + 3,000/(1.09)

^{1}+ 2,500/(1.09)

^{2}+ 7,500/(1.09)

^{3}= 5,648

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