Question
XYZ Ltd. is evaluating a project that requires an initial investment of ₹10 crore. The expected cash inflows over the next 5 years are uneven. The company uses a discount rate of 10%. The project has a positive NPV of ₹1.5 crore, but the IRR is only marginally above the cost of capital. Meanwhile, another project offers a higher IRR but lower NPV. What should the company prioritize if it wants to maximize shareholder wealth?
More Capital Budgeting Questions
- ABC Ltd. is evaluating two projects. Project A requires ₹50 lakhs investment and offers IRR of 14%. Project B requires ₹40 lakhs and gives IRR of 12%. The ...
- 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 cas...
- A firm is considering replacing its old machine with a new one. Old machine: Book value = ₹8L, Salvage = ₹2L New machine: Cost = ₹20L, Life = 5 years An...
- Which of the following budgets is considered the primary budget prepared in a business organization?
- Project X requires an initial investment of ₹10,00,000 and is expected to generate cash inflows of ₹3,00,000, ₹4,00,000, ₹5,00,000, and ₹2,00,000 over the ...
- A ₹1,000 face value bond, paying 10% annual coupon, maturing in 5 years, is currently selling for ₹1,100. What is its current yield?
- The cost of capital is used as a discount rate in:
- Profitability Index less than 1 indicates:
- The Capital Asset Pricing Model (CAPM) describes the relationship between:
- Which of the following appears under the heading 'Reserves & Surplus' in the balance sheet?
Hey! Ask a query
Please enter email id
The email must be a valid email address.
Please enter Mobile Number
Please enter valid Mobile Number
Please enter your Doubt
Think You're Ready for RBI Grade B?
RBI Grade B 2026 Phase 1 Memory Based Paper
- 200 Questions with Detailed Solutions
- Section-wise Coverage (GA, English, Quant & Reasoning)