Q1. Compute NPV, IRR and Pay Back Period for the projects described below supposing a discount rate of 10% and recommend which is a better option.
Particulars Project A Project B
0 Year (100,000) (100,000)
1st Year 10,000 8,000
2nd Year 25,000 18,500
3rd Year 45,000 60,000
4th Year 50,000 45,000
Q2. In brief describe how to assess an investment proposal under the ARR method with an appropriate illustration.
Q3. Compute the Pay Back period for the project described below:
COL – 100,000
YEAR CFs
1 20,000
2 33,000
3 45,000
4 18,000
5 20,000
6 60,000
Question 4: Determine the ARR of the Project with a average Cash Inflow of Rs.20,000 and average Investment of Rs. 200,000?