Calculate net present value for project x

Question

Problem

Suppose that you as the chief financial officer for Kindle Memorial Hospital and you were asked by the CEO to analyze two proposed capital investments - Project X and Project Y. Each project requires a net investment outlay of $10,000, and the cost of capital for each project is 12 percent. The projects' expected net cash flows are as follows:

Year     Project X        Project Y
0         ($10,000)      ($10,000)
1           6,500             3,000
2           3,000             3,000
3           3,000             3,000
4           1,000             3,000

Calculate net present value (NPV ) for Project X.