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    Question

    Project X has an initial outflow of ₹6,00,000 and is

    expected to generate cash inflows of ₹2,50,000, ₹3,00,000, and ₹2,00,000 over the next 3 years. If the cost of capital is 10%, the Net Present Value (NPV) is (use PV factors @10%: 0.909, 0.826, 0.751):
    A ₹(15,500) Correct Answer Incorrect Answer
    B ₹12,450 Correct Answer Incorrect Answer
    C ₹(8,250) Correct Answer Incorrect Answer
    D ₹5,800 Correct Answer Incorrect Answer

    Solution

    PV of Inflows = (2,50,000 × 0.909) + (3,00,000 × 0.826) + (2,00,000 × 0.751) = 2,27,250 + 2,47,800 + 1,50,200 = ₹5,91,750. NPV = PV of Inflows - Initial Outflow = 5,91,750 - 6,00,000 = ₹(8,250).

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