Question
Your Company is considering two mutually exclusive projects, A and B. Project A involves an outlay of Rs.100 million which will generate an expected cash
Your Company is considering two mutually exclusive projects, A and B. Project A involves an outlay of Rs.100 million which will generate an expected cash inflow of Rs.25 million per year for 6 years. Project B calls for an outlay of Rs.50 million which will produce an expected cash inflow of Rs. 13 million per year for 6 years. The company's cost of capital is 12 percent.
(a) Calculate the NPV and IRR of each project
(b) What is the NPV and IRR of the differential project (project A over B)
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Foundations of Finance The Logic and Practice of Financial Management
Authors: Arthur J. Keown, John D. Martin, J. William Petty
8th edition
132994879, 978-0132994873
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