Q No. 04

The P&G Pakistan is a big and mature company. Most of business graduates look to work in it. Company periodically hires internees for period of 6 months on trial basis. Suppose you are selected as an internee. The Financial has given you following data to test your finance skills. (Marks 5)

Year Project A Project B Project C

0 (170,000) (18,000) 20,000

1 11,000 10,000 7,000

2 24,000 6,000 7,000

3 25,000 10,000 7,000

4 380,000 8,000 7,000

a.If you apply the IRR criterion, which project will you choose?

b.If you apply profitability index criterion, which investment would you choose? Why?