the textile manufacturing company Ltd., is considering one of two mutually exclusive proposals projects M and N which require cash outlays of Rs80,000

10 The Textile Manufacturing Company Ltd. is considering one of two mutually exclusive proposals, Projects M and N, which require cash outlays of Rs. 8,50,000 and Rs. 8,25,000 respectively. The certainty-equivalent (CE) approach is used in incorporating risk in capital budgeting decisions. The current yield on government bonds is 6%. The expected net cash flows and their certainty equivalents are as follows: 15 (6 Points) - Present value factors of Rs. 1 discounted at 6% of the end of year 12 and 3 ore 0,943, 0.890 and 0.840 respectively. RR of the project and decide whether the project be Required: Which project should be accepter A accepted or not based on IRR Project M Year-end C.E. Cash Flow 450.000 5,00.000 500.000 Project N Cash Flow 4.50.000 450,000 5.00.000 0.9 0.8 0.7 Entetour