Question
A company is evaluating two mutually exclusive projects,
A and B, both requiring an initial investment of ₹1,50,00,000. The cost of capital is 10%. The cash flows for each project over 5 years are as follows: • Project A: ₹45,00,000 each year • Project B: ₹20,00,000, ₹40,00,000, ₹60,00,000, ₹50,00,000, ₹40,00,000 Calculate the Net Present Value (NPV) of each project and determine which project should be selected.Solution
Using 10% discount factor: Project A: Annuity of ₹45,00,000 for 5 years → PV = ₹45,00,000 × 3.791 = ₹1,70,59,500 NPV = ₹1,70,59,500 – ₹1,50,00,000 = ₹20,59,500 Project B: Use individual discounting: • Yr 1: 20,00,000 × 0.909 = ₹18,18,000 • Yr 2: 40,00,000 × 0.826 = ₹33,04,000 • Yr 3: 60,00,000 × 0.751 = ₹45,06,000 • Yr 4: 50,00,000 × 0.683 = ₹34,15,000 • Yr 5: 40,00,000 × 0.621 = ₹24,84,000 Total PV = ₹1,55,27,000 → NPV = ₹5,27,000 Hence, Project A is better with higher NPV.
As per the recent annual report of ‘Hotels 50 2022’, which of the following hotel brand of India became world’s strongest hotel brand?
Who did Pankaj Advani defeat to win his 28th World billiards crown?
_________ received a $500million loan from the International Finance Corporation (IFC) for microloans to underserved women.
Under Delhi's old-age pension scheme, how much monthly benefit is provided to senior citizens aged 70 and above?
When will the new GDP series with 2022–23 as base year be released by MoSPI?
Who was appointed as the Director General of the National Investigation Agency (NIA)?
What initiative did India and Nepal undertake to promote Sanskrit research and education?
Which of the following company is not a Non-Banking Financial Company (NBFC)?
On which date is National Space Day celebrated (commemorating Chandrayaan-3’s soft landing)?
What is the initial corpus of the Agri-SURE fund unveiled by NABARD to promote innovation in agriculture and rural development?
