Question

From the following information, calculate the net present value of the two project and suggest which of the two projects should be accepted a discount rate of the two. Scrap Value Rs.1,000 Rs. 2,000 Estimated Life 5 years 5 years Initial Investment Rs. 20,000 Rs. 30,000 Project X Project Y The profits before depreciation and after taxation (cash flows) are as follows : PV Factor@ 10% 0.90 0.82 0.751 0.68 0.62 0.56 Project Y 20,000 10,000 5,000 3,000 2,000 Project X 5,000 10,000 10,000 3,000 2,000 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6​

Answer 1

Answer:

This method is considered to be the best method for evaluation of a project because it provides importance to time value of money. Therefore, the net present value for the project is -$8,670.

Explanation:

$itzdivyanshi$

Answer 2

Answer:

When comparing two or more projects, the one with the highest NPV is typically the best choice.

Explanation:

So the simplest way to apply the net present value method to capital rationing is to determine the NPV of each project and then list them in order from highest NPV to smallest.

#SPJ3