Question: M/s Priya Industries Ltd. is evaluating 2 options of investments. Each one has the following mentioned Cash Flows. Rate of Interest is 5%. Evaluate the

M/s Priya Industries Ltd. is evaluating 2 options of investments. Each one has the following mentioned Cash Flows. Rate of Interest is 5%.


Evaluate the projects using: i) Pay-back period


ii) NPV


iii) IRR


(Show the calculations for each method.)


Which option you as the Chief Finance Officer of the Company would you select? Give reasons. (10 Marks)


Year

A

B

0

-40000

-50000

1

5000

8500

2

12000

15000

3

10000

12000

4

12500

12300

5

10500

10500

 

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