Question: Solve the below problem. (DONOT use CHATGPT else will report to cheggs) You are the CFO at Infosys ltd which is considering the following two
Solve the below problem. (DONOT use CHATGPT else will report to cheggs)
You are the CFO at Infosys ltd which is considering the following two mutually exclusive projects. All amounts are in INT
| Year | Cashflow (Project A) | Cashflow (Project B) |
| 0 | -50,00,000 | -42,00,000 |
| 1 | 21,00,000 | 18,00,000 |
| 2 | 18,00,000 | 8,00,000 |
| 3 | 15,00,000 | 6,00,000 |
| 4 | 10,00,000 | 13,00,000 |
| 5 | 7,50,000 | 21,00,000 |
Whichever project we choose, we require a 16 percent return on our investment.
a. If we apply the payback criterion, which investment is to be chosen?
b. If we apply the discounted payback criterion, which investment is to be chosen? why?
c. If we apply the NPV criterion, which investment will be chosen? why?
d. Based on the answers in (a) through (c) which project will be finally chosen? why?
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