Suppose you are faced with choosing between 2 mutually exclusive investments X and Y that have the following Cash flows.
End of year Project X Project Y
Cash flows Cash flows
Sh. ‘000' Sh. ‘000'
0 - 1000 - 1000
1 0 2000
2 0 0
3 3,375 0
If the required rate of return is 10% we can summarize our investment appraisal results as follows