Question

Two mutually exclusive projects A and B have the following NPVs: • Project A: ₹40 lakh, initial investment ₹100 lakh • Project B: ₹35 lakh, initial investment ₹80 lakh Which project should be selected and why?

A Project A because of higher NPV
B Project B because it requires less capital
C Project B due to higher Profitability Index
D Project A due to higher IRR
E Either can be selected as NPV is positive
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