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Determine the risk adjusted Net Present Value of the following Projects: - Particulars Project A Project B Project C Net Cash Outlays (Rs) 100,000.00 120,000.00

Determine the risk adjusted Net Present Value of the following Projects: -

Particulars

Project A

Project B

Project C

Net Cash Outlays (Rs)

100,000.00

120,000.00

210,000.00

Project Life

5 Years

5 Years

5 Years

Annual Cash Inflow (Rs)

30,000.00

42,000.00

70,000.00

Coefficient of Variation

0.40

0.80

1.2

The company selects the risk-adjusted rate of discount on the basis of the coefficient of variation.

Coefficient of Variation

Risk Adjusted Rate of Discount

Present Value factor 1 to 5 years at risk adjusted rate of discount

0.0

10 %

3.791

0.4

12 %

3.605

0.8

14 %

3.433

1.2

16 %

3.274

1.6

18 %

3.127

2.0

22 %

2.864

More than 2.0

25 %

2.689

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