Sneha Limited is leading manufacturer of automotive components. It supplies to the original equipment manufacturers as well as the replacement market. Its projects typically have a short life as it introduces new models periodically. You have recently joined Sneha Limited as financial analyst reporting to Ravi Sharma, the CFO of the company. He has provided you the following information about three projects, A, B, and C, that are being considered by the Executive Committee of Ramesh Limited: Project A is an extension of an existing line. Its cash flow will decrease over time. Project B Involves a new product. Building its market will take some time and hence its cash flow will increase over time. Project C is concerned with sponsoring a pavilion at a Trade Fair. It will entail a cost initially which will be followed by a huge benefit for one year. However, in the year following that a substantial cost will be incurred to raze the pavilior. The expected net cash flows of the three projects are as follows. Year Project A Project B Project C 0 75000) 75000) 75000) 31,000 43,500 $2,000 2 37,000 48,000 34,000) 3 24,800 23,000 Ravi Sharma believes that all the three projects have risk characteristics similar to the average risk of the firm and hence the firm's cost of capital, viz. 9 percent, will apply to them. You are asked to evaluate the projects. What is payback period and discounted payback period? Find the payback periods and the discounted payback periods of Projects A, B and C. k) What is the net present value (NPV)? What are the properties of NPV? Calculate the NPVS of Projects A, B and C. 1) What is internal rate of return (IRR)? What are the problems with IRR? Calculate the IRRs for Projects A, B and C.