A firm in the business of manufacturing of automobile components is considering two mutually exclusive technologies for the manufacture of Hydraulic Brakes.

These two technologies are designated as Project A and Project B with project costs of $1650 Million and $2000 Million.

Depending upon various features of the product obtainable from two Technologies the firm has developed a forecast of cash flows for 5 years i.e. the life of each project. These cash flows are as below:

	Million	Million
Year	Project A	Project B
1	350.00	475.00
2	475.00	575.00
3	700.00	725.00
4	450.00	525.00
5	750.00	900.00

Project A is a familiar technology and therefore the firm feels that the current cost of capital of 13% is the appropriate discount rate. However, Project B is considered riskier than the Project A and therefore firm would like to use a discount rate of 15% higher than the current cost of capital.

Calculate the following-

1. NPVs of the Projects A and B & interpretation of the same
2. IRR of the Projects A and B & interpretation of the same
3. Which Project would you consider with NPV rule and IRR rule
4. .Firm believes that under most probable circumstances it would be able to re-invest the internally generated cash flows of the project at 14%. calculate MIRR of the Project
5. Cross over Rate & analyze of the same
6. Pay Back Period of both the Project
7. Based on capital Rationing which project is better
8. ARR of the Projects A and B
9. Explain Hurdle rate of Project
10. Steps Of calculating cash flow from Profit & Loss Account