Question

A project requires an investment of Rs. 10,00,000. It generates annual cash inflows of Rs. 3,00,000 for 5 years. If cost of capital is 10%, should the project be accepted based on NPV? (PV factor of annuity of Rs. 1 for 5 years @10% = 3.791).

A NPV = Rs. 1,26,000 (Accept)
B NPV = Rs. (1,26,000) (Reject)
C NPV = Rs. 1,37,300 (Accept)
D NPV = Rs. (1,37,300) (Reject)
E None of the above
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