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Answer (A) is correct . The net present value of Project X can be determined using the present value factor for an annuity (3.170) because the cash flows are even over the life of the project. An ordinary annuity of $40,000 discounted at 10% for the next four years has a present value of $126,800. The cash inflows of Project Y are uneven and so must be ? discounted with individual factors for each of the four years as follows: Net Cash PV Present Year Inflows Factor Value 1 $10,000 0.909 $????9,090 2 20,000 0.826 16,520 3 60,000 0.751 45,060 4 80,000 0.683 54,640 $125,310

Answer (B) is incorrect because Project Y has a lower net present value.
Answer (C) is incorrect because The projects are mutually exclusive.
Answer (D) is incorrect because Both projects have a positive net present value when discounted at the company’s required rate of return.