Question
An investment project costs ₹1,00,000 and is expected
to generate cash inflows of ₹30,000 per year for 5 years. If the cost of capital is 10%, determine whether the project is financially viable based on Net Present Value (NPV). Use PV factor of 10% for 5 years = 3.7908.Solution
NPV = ₹30,000 × 3.7908 – ₹1,00,000 = ₹1,13,724 – ₹1,00,000 = ₹13,724
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