Question
Project A has an initial investment of Rs. 21 lakhs and projected cash inflows of Rs. 5,25,000 for 5 years. Project B has an initial
Project A has an initial investment of Rs. 21 lakhs and projected cash inflows of Rs. 5,25,000 for 5 years. Project B has an initial investment of Rs. 34.5 lakhs and projected cash inflows of Rs. 9,25,000 for 5 years. Assume the discount rate to be 10 percent throughout.
(a) Work out the Undiscounted and Discounted Pay Back Period for the two projects. If the criterion is 5 years, which project should be considered based on Discounted PBP? (b) Work out the Net Benefit Cost Ratio for the two projects. Which project is acceptable? Why?
Do all the calculations manually.
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