Question

You are evaluating two project proposals. Project A will need investment of Rs. 10 lac in one year from now. It will return Rs. 3 lac in first year, Rs. 4.2 lac in second year and Rs. 6.8 lac in third year. Project B will need investment of Rs. 8 lac in one year from now. It will return Rs. 4.2 lac in first year, Rs. 3.5 lac in second year, Rs. 2.4 lac in third year. Which project you will select? Please use NPV method.

Answer 1

Answer:

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Explanation:

You are evaluating two project proposals. Project A will need an investment of Rs. 10 lac in one year from now. It will return Rs. 3 lac in the first year, Rs. 2 lac in second year, and Rs. 6.8 lac in the third year. Project B will need an investment of Rs. 8 lac in one year from now. It will return Rs. 4.2 lac in the first year, Rs. 3.5 lac in the second year, Rs. 2.4 lac in the third year. Which project you will select? Please use the NPV method.