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Consider the following mutually exclusive projects: Projects C () C () C () C () C () A -8,000 4,000 3,000 2,000 10,000 B -10,000
Consider the following mutually exclusive projects:
Projects | C₀ (₹) | C₁ (₹) | C₂ (₹) | C₃ (₹) | C₄ (₹) |
A | -8,000 | 4,000 | 3,000 | 2,000 | 10,000 |
B | -10,000 | 3,000 | 3,000 | 4,000 | 6,000 |
C | -7,000 | 2,000 | 3,500 | 2,500 | 5,000 |
D | -5,000 | 2,000 | 2,500 | 3,000 | 3,500 |
Required:
- Calculate the payback period for each project.
- If the standard payback period is 3 years, which project will you select?
- Compute the NPV of each project if the cost of capital is 8%. Which project will you recommend based on NPV?
- Calculate the IRR for each project.
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