Problem
XYZ Co has two investments X and Y. Investment X has an initial capital outlay of $150 million, and the investment is expected to generate $380 million in ten years. Investment Y has an initial capital outlay of $200 million, and the investment is expected to generate $550 million in ten years. Assume XYZ has a cost of capital of 10%.
i. Determine the internal rate of return of Investment X and Investment Y. Should X and Y be taken?
ii. Determine the net present value of Investment X and Investment Y. Should X and Y be taken?