An organization intends to invest out of two options A and B available to them. The initial investment of the two project options are Rs 20,00,000/- and Rs25,00,000/- respectively. The earnings from the project are provided below. The organization intends to raise the required capital through issuing debt at an annual interest rate of 8%.

Estimate Payback period, discounted payback period, IRR and NPV of both the projects.

Suggest which should be adopted and why?

EARNINGS YEAR PROJECT A (Rs) PROJECT B (Rs) 1 8,00,000 9,00,000 2 7,00,000 9,80,000 3 6,00,000 10,00,000 4 8,00,000 9,50,000 5 9,50,000 8,50,000 6 10,90,000 11,00,000 7 9,00,000 12,50,000 8 12,00,000 9,45,000 9 8,25,000 8,65,000 10 13,00,000 14,00,000