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    Question

    Project requires initial investment of ₹10 lakhs.

    Annual cash inflows: Year1-₹2L, Year2-₹3L, Year3-₹4L, Year4-₹5L. Cost of capital 10%. NPV? (PV factors: 0.909, 0.826, 0.751, 0.683)
    A ₹1,08,000 Correct Answer Incorrect Answer
    B ₹1,84,000 Correct Answer Incorrect Answer
    C ₹2,15,000 Correct Answer Incorrect Answer
    D ₹3,00,000 Correct Answer Incorrect Answer

    Solution

    (2L×0.909)+(3L×0.826)+(4L×0.751)+(5L×0.683) = 1.818L+2.478L+3.004L+3.415L = ₹10.715L. NPV = 10.715L - 10L = ₹0.715L = ₹71,500. Closest is a) considering rounding differences.

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