8%

-500000
150000
300000
125000

₹ -479,458.16

Conclusion : As the Cummulative present value is less than the initial investment , we reject the project.
Steps in 190pg no.
t , we reject the project.
Annuity
-120000
50000 ₹ 126,564.73
50000 -120000 pg.195
50000 npv ₹ 6,564.73 Accept the project irr 12%

PVIFA ( 3 YEARS , 95 ) CHECK THE TABLE VALUE FOR 3 YEAR TABLE 4 FOR ANNUITY

₹ 113,894.15
LIMITATIONS OF IRR
1. Multiple IRR - Since it is using trial and e
2. Scale Difference - it cannot differentiate
3. Unequal lives - it cannot distunguish bet

202 pg no This is where NPV will help , with Equivalen

You need to find NPV of both the projects
 ( IRR greater than Discount rate - then it should be accepted - this project can be accepted )

4 FOR ANNUITY

e IRR - Since it is using trial and error , we might get abnormal values sometimes - which cannot be helpful in decision making.
ifference - it cannot differentiate between the scale of projects and might give same IRR
al lives - it cannot distunguish between projects who have different shelf lives as in one is 3yrs and one is 8yrs

ere NPV will help , with Equivalent Annual Flow Approach

to find NPV of both the projects , then find out PMT of the value of NPV and which ever gives you the highest PMT value , we should acce
n decision making.

st PMT value , we should accept that.