Question
Mutually exclusive projects: A (NPV=₹200, IRR=18%), B
(NPV=₹250, IRR=15%). Cost of capital=12%. Which to select?Solution
For mutually exclusive projects, select based on NPV as it gives absolute value addition. Both IRRs > cost of capital, but B has higher NPV.
All of the following are capital receipts, except ________
A firm is considering replacing its old machine with a new one.
Old machine: Book value = ₹8L, Salvage = ₹2L
New machine: Cost = ₹20...
The rule for nominal accounts is
Project requires initial investment of ₹10 lakhs. Annual cash inflows: Year1-₹2L, Year2-₹3L, Year3-₹4L, Year4-₹5L. Cost of capital 10%. NPV? (...
Project requires initial investment of ₹10 lakhs. Annual cash inflows: Year1-₹2L, Year2-₹3L, Year3-₹4L, Year4-₹5L. Cost of capital 10%. NPV? (...
Project A requires investment of ₹10,00,000 with annual cash inflows of ₹3,00,000 for 5 years. Cost of capital = 10%. Compute Net Present Value (NPV...
What is the shareholder’s total return, if the shareholder has purchased a share when the market price is Rs.50, and sold after a year to Mr. B at Rs....
At the end of the accounting year, all the nominal accounts of the ledger book are:
Raman Ltd. is evaluating a new machine costing ₹60 lakhs with a useful life of 5 years. The expected annual operating cash inflows (after-tax) are ₹...
If two mutually exclusive projects have conflicting rankings under NPV and IRR, which method should be preferred?
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