Q:01 A company is searching for an investment proposal. The company found two projects A and B in the market. The relevant information for both the projects is as follows; Years Project A cash inflows (PKR) Project B cash inflows (PKR)

1 no return 75000

2 no return 25000

3 78000 no return

4 64000 46000

5 82000 95000

6 no return no return

7 55000 31000

8 25000 26000

The initial investment on project A is PKR 65,000 and project B required initial investment of PKR 72,000. The salvage value was ignored and the tax rate is expected to be 40% while discount rate is 10% on both the projects. Based on NPV, Profitability index, payback period and ARR methods, suggest which project is feasible for the investment. Use straight line method for depreciation. Please write a brief note based on your calculations as policy recommendation to the company