Answer to Question #272628 in Economics for Manisha

Question

You have been asked, as a financial manager in Cortex Limited, to consider whether to invest in projects A or B. The expected cash flows for projects A& B over the next 4 years are given. Each project has an initial investment of Rs 150 million (Mn) and the Weighted Average Cost of Capital is 13%.

Years Expected Net Cash flows

   Project A 68,65,63,60

Project B 74,76,73,71

        Required:

Calculate and interpret your results for each project, using these investment appraisal methods below:

(i) Payback (ii) NPV (iii) IRR (iv) ARR

Answer 1

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