Project A

Year Cash flows (Rs.)

cumulated cash flow
0 -2,500,000
1 75,000 75,000
2 125,000 200,000
3 150,000 350,000
4 160,000 510,000
5 160,000 670,000

Project B
Year Cash flows (Rs.) cumulated cash flow
0 -170,000
1 45,000 45,000
2 65,000 110,000
3 97,000 207,000
4 110,000 317,000
5 120,000 437,000
Project A
Year Cash flows (Rs.) present value of inflow
0 -2,500,000 pv=fv/(1+i)^n
1 75,000 69444.4444444444
2 125,000 107167.352537723
3 150,000 119074.836153025
4 160,000 117604.776447433
5 160,000 108893.3115254

sum of PV of inflow 522184.721108026

npv = sum of PV of inflow - sum of pv of outflow

npv = -1,977,815

profitibility index = sum of PV of inflow/ sum of pv of outflow

0.20887388844321

I
Project B
Year Cash flows (Rs.) present value of inflow
0 -170,000 pv=fv/(1+i)^n
1 45,000 41666.6666666667
2 65,000 55727.0233196159
3 97,000 77001.7273789565
4 110,000 80853.2838076099
5 120,000 81669.9836440503

sum of PV of inflow 336918.684816899

npv = sum of PV of inflow - sum of pv of outflow

npv = 166,919

profitibility index = sum of PV of inflow/ sum of pv of outflow

1.98187461657
 i 8%

8%