Question 1

A firm whose cost of capital is 10% is considering two mutually exclusive projects X and Y, the details of which are:

Year Project X Project Y

Cost 0 Rs. 70,000 Rs. 70,000

Cash Inflows1Rs. 10,000Rs. 50,000

2Rs. 20,000Rs. 40,000

3Rs. 30,000Rs. 20,000

4Rs. 45,000Rs. 10,000

5Rs. 60,000Rs. 10,000

Compute the Net Present Value at 10%, Profitability Index, and Internal Rate of Return of the two projects.