● Y Ltd. is planning to undertake any one of the following three mutually exclusive projects. The information relevant for this purpose is given as follows.

Projects Annual Cash Flow (`) Initial Investment (`) Project Duration (Years)

P Q

R 15,000 20,000 22,000 56,000 70,000 68,000 10 8

9 If Cost of Capital is 12%, advise the management regarding the selection of the best project.

[Given, Present Value of an Annuity of `1.00 at a discount rate of 12%:

Present Value interest factor of an Annuity (PVIFA) (12%, 10 years) = 5.65; PVIFA (12%, 8 years) =

4.97; PVIFA (12%, 9 years) = 5.33]