Question: XYZ Ltd. is evaluating two exclusive projects that require an initial investment of 30,000 each and have a life of 5 years. The companys cost

XYZ Ltd. is evaluating two exclusive projects that require an initial investment of ₹30,000 each and have a life of 5 years. The company’s cost of capital is 15% and it pays tax at 30%. Depreciation is on a straight-line basis. The projects' net cash flows before taxes and the PV factors (at 15%) are given below:

Year	1	2	3	4	5
Project 1	12,000	12,000	10,000	8,000	6,000
Project 2	9,000	11,000	11,000	10,000	9,000
PV factor	0.870	0.756	0.658	0.572	0.497

You are required to:

Calculate the NPV for both projects.
Decide which project should be accepted.

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