For the exercise, assume that the discount rate is 10%.

Questions
1. What projects will you recommend for investment by your company?
2. Project D has negative IRR. Why is it happening? What is your solution?
3. What is the IRR for project F and why?
Often a firm may have to choose only one among two or more projects. This can
the information given in each question.
What will be your decision under the following circumstances?
4. Projects H and Project I are mutually exclusive projects. What project will
will you use to choose a project? Are you making any assumptions to reach the
5. Due to capital rationing constraints (lack of funds), you can choose only o
6. Suppose, you receive new information that Project B and Project G are al
The division submitted two projects, depending on the capital constraints of the
Project # A B C D E F
0 -76000 -19000 -76000 -90000 -76000 5000
1 12540 11390 30000 148000 63308 -16500
2 12540 10490 15000 98000 12692 13750
3 12540 5609 20000 -145000 6270
4 12540 41385
5 12540
6 20000
7 12540
8 38000

A B C D E F
₹ 6,988.23 4238.09 6962.23 16596.54 -3247.27 1363.64
12.11% 24% 14% -8% 6% Err:523
₹ 215,537.19
₹ -131,818.18
-90000
₹ -6,280.99
 G H I Discount Rate 10%
-19431 -76000 -76000
13390 -13300 45600
9490 -2280 34200
8609 2280 11400
-7828 13300 3420
-6523 26600 2660
13457 45600
85500

G H I
5252.00 6953.41 6271.55
25% 11% 15%