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a.Two mutually exclusive projects are being considered for investment. Project A 1 requires an initial outlay of Rs. 30,00,000 with net receipts estimated as Rs.
a.Two mutually exclusive projects are being considered for investment. Project A1 requires an initial outlay of Rs. 30,00,000 with net receipts estimated as Rs. 9,00,000 per year for the next 5 years. The initial outlay for the project A2 is Rs. 60,00,000, and net receipts have been estimated at Rs. 15,00,000 per year for the next seven years. There is no salvage value associated with either of the projects. Using the benefit cost ratio, which project would you select? Assume an interest rate of 10%.
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