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Mrs Aisha is a successful business woman and she invests in the projects that have early paybacks and generate high NPV. Her manager has recently
Mrs Aisha is a successful business woman and she invests in the projects that have early paybacks and generate high NPV. Her manager has recently proposed her two projects for the investment. The details of the both the projects are given below.
(discount rate = 10%)
years | Cash flow - 1 | Cash flow 2 |
0 | (15000) | (16000) |
1 | 5000 | 2000 |
2 | 4500 | 3400 |
3 | 6000 | 8000 |
4 | 2000 | 7000 |
Calculate
- Payback for the first project
- Payback for the second project
- NPV for the first project
- NPV for the second project
- Which project he must choose on the basis of payback years
- Which project he must choose on the basis of NPV
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