Your company wants to choose between two mutually exclusive investment projects in India.

Project A costs 180 million Indian Rupees (INR), and the expected net cash flows are INR195 million in Years 1 and 2, followed by INR320 million in Year 3.

Project B costs INR250 million with expected net cash flows of INR195 million in the first two years, followed by INR170 million in the next two years, and INR300 million in Year

The current spot INR=1AUD exchange rate, and the expected rates for the next five years are as follows:

Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
54.2698	54.2975	54.3103	54.3144	54.2912	54.1873

Your company evaluates domestic projects at a 8% p.a. required rate of return. The country risk premium is 4%.

Evaluate which project should be recommended.

Hint: Use NPV & NPV perpetuity formulas