Firms cost of capital 10%

Year-End Cash Flow

Year Project A Project B
0 -1,000,000 -1,250,000
1 600,000 -150,000
2 500,000 -100,000
3 300,000 -50,000
4 150,000 850,000
5 100,000 1,100,000
6 50,000 1,350,000
NPV ₱376,839.97 ₱519,040.69
Accept if > 0 Accept Accept

IRR 29% 17%

Accept if > cost of Accept Accept

PI
Accept if > 1
NPV of inflows ₱1,376,839.97 ₱1,769,040.69
NPV of outflows 1,000,000.00 1,250,000
PI 1.38 1.42
Accept Accept

Payback period

Year Project A Cumulative Payback Project B Cumulative Payback

0 -1,000,000 -1,000,000 -1,250,000 -1,250,000 1
1 600,000 -400,000 1 -150,000 -1,400,000 1
2 500,000 100,000 0.80 -100,000 -1,500,000 1
3 300,000 -50,000 -1,550,000 1
4 150,000 850,000 -700,000 1
5 100,000 1,100,000 400,000 0.64
6 50,000 1,350,000
1.80 5.64