Question: 2. I. Briefly explain project ranking and explain how projects are ranked based on absolute ranking and relative ranking using a hypothetical example. (03 Marks)

2. I. Briefly explain project ranking and explain

2. I. Briefly explain project ranking and explain how projects are ranked based on absolute ranking and relative ranking using a hypothetical example. (03 Marks) II. Net cash flows estimated for project A, B and C are given below. Time 0 1 2 3 4 5 6 7 8 Net cash flow (Rs: Billions) Project A Project B Project C -25000 -4500 -10000 2250 300 228 3000 500 2000 4000 600 2000 6000 1000 2700 6000 1500 1000 7000 2000 3000 9000 2000 3000 13000 5000 I. Based on above information, calculate the Net Present Value (NPV) for each project based on a 11% discount rate and select the best project among them. (04 Marks) II. What is your choice regarding the above two projects if the discount rate is increased to 15%? (04 Marks) III. Calculate the Internal Rate of Return (IRR) for each the above projects and choose the best project based on IRR. (04 Marks)

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