ASSIGNMENT:

Note subject business finance and simplify the formula step by step in ms word format with putting the value in formula

Question; Alfa Corporation has identified the following two mutually exclusive projects. The CFO of the company wants to evaluate the identified projects. For this purpose he asked Mr. Naveed to evaluate those projects and establish their feasibility with the help of different capital budgeting techniques. Following are the details of the two mutually exclusive projects.

Period	Project A	Project B
	(Rs.)	(Rs.)
0	-42,000	-42,000
1	25,000	15,000
2	21,000	17,000
3	15,000	23,000
4	11,000	27,000

As per the company policy, Mr. Naveed decided to evaluate both projects with the help of IRR and NPV techniques of capital budgeting.

Requirements:

1. What is the IRR for each of these projects? Which project company should acceptaccording to IRR rule? (13 Marks)

2. What is the NPV for each of these projects? If the required rate of return is 12 percent. Which project company should accept according to NPV rule? (5 Marks)

III.If the decision on the basis of NPV is different than that of IRR, which particular criteria company should prefer and why? (2 Marks)

IMPORTANT INSTRUCTIONS:

• Complete calculations are required for every part of the problem. Incomplete calculations will result in loss of marks.

• Discount factors and resulting figures should not be rounded up more than four decimal digits.

IMPORTANT:

24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

OTHER IMPORTANT INSTRUCTIONS:

DEADLINE:

• Make sure to upload the solution file before the due date on VULMS.
• Any submission made via email after the due date will not be accepted.

FORMATTING GUIDELINES:

• Use the font style Times New Roman or Arial and font size 12.
• It is advised to compose your document in MS-Word format.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.