The following details are available for Gamma Ltd: Details Proposal A Proposal B Initial Cost A - Rs.10,00,000 B - Rs. 12,00,000 Expected life 4 years for A and 5 years for B Profits before tax after depreciation A - Rs. 3,00,000 each for first two years Rs. 3,50,000 each for next two years and for B - Rs. 3,00,000 each for first two years Rs. 3,50,000 each for next three years Calculate Discounted Payback period and suggest which one is better if the discounting factor is 10% and tax rate 30%. Show in detail relevant calculations and use Straight Line Method of Depreciation. 

Answer rating: 100% (QA)

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