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Mohan Ltd. Is a small company that is currently analyzing capital expenditure proposals for the purchase of equipment; the company uses the net present value
Mohan Ltd. Is a small company that is currently analyzing capital expenditure proposals for the purchase of equipment; the company uses the net present value techniques to evaluate projects. The capital budget is limited to Rs. 500000 which Mohan limited believes is the maximum capital it can raise. The initial investment and project net cash flows foreach project are shown below. The cost of capital of Mohan Limited is 12%. You are required to compute the NPV of different projects with decisions.
Project A | Project B | Project C | Project D | |
Initial Investment | 200000 | 190000 | 250000 | 210000 |
Project Cash Inflows: | ||||
Year 1 | 50000 | 40000 | 75000 | 75000 |
2 | 50000 | 50000 | 75000 | 75000 |
3 | 50000 | 70000 | 60000 | 60000 |
4 | 50000 | 75000 | 80000 | 40000 |
5 | 50000 | 75000 | 100000 | 20000 |
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