Question: Mahesh Enterprises is considering of purchasing a CNC Machine. The following are the earnings after tax from the two alternative proposals under consideration each costing Rs. 8, 00,000. Select the better one, if the company wishes to operate at 10% rate of return.
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Year 1
|
Year 2
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Year 3
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Year 4
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Year 5
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|
Proposal I
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80000
|
240000
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320000
|
480000
|
320000
|
|
Proposal II
|
240000
|
320000
|
400000
|
240000
|
160000
|
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Present value of Re @ 10%
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0.909
|
0.826
|
0.751
|
0.683
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0.620
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