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    Question

    An investment of ₹1,50,000 promises to pay ₹50,000

    at the end of each of the next three years, plus ₹70,000 at the end of year 4. If the discount rate is 10% p.a., determine the net present value of this investment.
    A ₹72,155 Correct Answer Incorrect Answer
    B ₹1,50,000 Correct Answer Incorrect Answer
    C ₹1,72,155 Correct Answer Incorrect Answer
    D ₹45,200 Correct Answer Incorrect Answer
    E ₹22,155 Correct Answer Incorrect Answer

    Solution

    PV of cash Inflows =  ₹50,000 × 2.4869 = ₹1,24,345 ₹70,000 × 0.6830 = ₹47,810 Total = ₹1,72,155 NPV = PV of Cash inflows- PV of cash outflows  = ₹1,72,155- ₹1,50,000=  22,155

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