An organization intends to invest out of two options Alpha and Beta available to them. The initial investment of the two project options are Rs 5,00,000/- and Rs 6,70,000/- 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 7%. Estimate Payback period, discounted payback period, IRR and NPV of both the projects. (16 marks) Based on the results of the capital budgeting techniques, suggest which project should be adopted and why? (4 marks)

YEAR EARNINGS PROJECT Alpha (Rs) PROJECT Beta (Rs) 0 -500000 -670000 1 80,000 90,000 2 70,000 1,98,000 3 75,000 1,30,000 4 80,000 95,000 5 95,000 85,000 6 1,19,000 1,10,000 7 90,000 12,500 8 12,000 94,500 9 82,500 86,500 10 13,000 14,000