Question: A company is deciding to choose between two mutually exclusive projects A and B. Project A requires an initial investment of Rs 3,00,000 and is

A company is deciding to choose between two mutually exclusive projects A and B.

Project A requires an initial investment of Rs 3,00,000 and is expected to generate cash flow of Rs 1,50,000 per annum for the 3 years of its life. Project B, on the other hand, requires Rs 3,40,000, has a life of 6 years and would generate Rs 1,00,000 every year. Which proposal should be accepted? Assume a 10% rate of interest.

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