A firm is considering the following two mutually exclusive investments: Cash Flows (Rs) Projects C 0
A firm is considering the following two mutually exclusive investments:
Cash Flows (Rs)
Projects C0 C1 C2 C3
A – 25,000 + 15,000 + 15,000 + 25,640
B – 28,000 + 12,672 + 12,672 + 12,672
The cost of capital is 12 per cent. Compute the NPV and IRR for each project. Which project should be undertaken? Why?