Q$1.$ A firm in the business of manufacturer of automobile components is considering two mutually

exclusive technologies for manufacturer of a hydraulic brakes. These two technologies are designated

as Option A and Option B with project cost of Rs$.1600$ lakh and Rs$.1850$ lakh. Depending upon the

various features of the product obtainable from the two technologies the firm has developed a forecast

of cash flows for $5$ years. These cash flows are as follows

Option A is a familiar technology and therefore the firm feels that the current cost of capital of $13\%$ is

the appropriate discount rate. However, Option B is considered riskier than the Option A and therefore

firm would like to use a discount rate of $15\%.$ You are required to calculate $($i$)$ NPV for A and B$,($ii$)$

IRR for A and B$,($iii$)$ which option you will consider with NPV rule and IRR rule, $($iv$)$ Firm believes

that under most probable circumstances it would be able to re$-$invest the internally generated cash flows

of the project at $14\%.$ What would be your decision in that case.