Question

(a) ABC Ltd., planning to go for capacity expansion in the near future and their financial experts submitted the following financial details regarding two projects. You, as a new finance manager, evaluate the projects by using Pay Back Period and Internal Rate of Return and suggest which one is to be accepted with clear reasons. Cash Flows 0 1 2 3 4. 5 6 Project 1 Rs. in lakhs 10,00,000 3,00.000 2,00,000 1,50,000 4,00.000 5,00,000 50.000 Project 2 Rs. in lakhs 10.00,000 2.00.000 5,00,000 4,00,000 1,00,000 50.000 75,000 ON​

Answer 1

Answer:

(a) ABC Ltd., planning to go for capacity expansion in the near future and their financial experts submitted the following financial details regarding two projects. You, as a new finance manager, evaluate the projects by using Pay Back Period and Internal Rate of Return and suggest which one is to be accepted with clear reasons. Cash Flows 0 1 2 3 4. 5 6 Project 1 Rs. in lakhs 10,00,000 3,00.000 2,00,000 1,50,000 4,00.000 5,00,000 50.000 Project 2 Rs. in lakhs 10.00,000 2.00.000 5,00,000 4,00,000 1,00,000 50.000 75,000 ON