A firm is considering the following two mutually exclusive investments: Cash Flows (Rs) Projects C 0

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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?

 

 
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