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  • Capital Budgeting-201260

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    Akshat Nagpal
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    The document compares two capital budgeting projects, Project A and Project B. It provides the rate of interest, costs, cash inflows for each project over 5 years. It calculates the net present value (NPV) and internal rate of return (IRR) for each project. Project A has a higher NPV of ₹30,443.92 compared to Project B's NPV of -₹958.69, so Project A is selected. The document also shows how the NPV of Project A varies with different rates of return.

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    Capital Budgeting-201260 (1)

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    The document compares two capital budgeting projects, Project A and Project B. It provides the rate of interest, costs, cash inflows for each project over 5 years. It calculates the net present value (NPV) and internal rate of return (IRR) for each project. Project A has a higher NPV of ₹30,443.92 compared to Project B's NPV of -₹958.69, so Project A is selected. The document also shows how the NPV of Project A varies with different rates of return.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    13 views4 pages

    Capital Budgeting-201260

    Uploaded by

    Akshat Nagpal
    The document compares two capital budgeting projects, Project A and Project B. It provides the rate of interest, costs, cash inflows for each project over 5 years. It calculates the net present value (NPV) and internal rate of return (IRR) for each project. Project A has a higher NPV of ₹30,443.92 compared to Project B's NPV of -₹958.69, so Project A is selected. The document also shows how the NPV of Project A varies with different rates of return.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 4

    Capital Budgeting

    Project A Project B
    Rate of Interest 12% 12%
    Cost of project -₹ 500,000.00 -₹ 550,000.00
    Cash Inflows (Year 1) ₹ 400,000.00 ₹ 20,000.00
    Year 2 ₹ 60,000.00 ₹ 500,000.00
    Year 3 ₹ 50,000.00 ₹ 60,000.00
    Year 4 ₹ 70,000.00 ₹ 70,000.00
    Year 5 ₹ 80,000.00 ₹ 80,000.00
    Project to be Selected
    Net Present Value (NPV) of the Project ₹ 30,443.92 -₹ 958.69 Project A
    Internal Rate Of Return (IRR) of the Project 16% 12%

    Rate Of Return 10% 11% 12%


    NPV of Project A at different Rate of Returns ₹ 48,273.53 ₹ 39,204.55 ₹ 30,443.92

    Capital Budgeting
    ₹60,000.00
    NPV of project A Value

    ₹50,000.00
    ₹40,000.00
    ₹30,000.00 Project A
    ₹20,000.00
    ₹10,000.00
    ₹0.00
    9% 10% 11% 12% 13% 14% 15% 16%
    Rate of Return
    13% 14% 15%
    ₹ 21,976.72 ₹ 13,788.93 ₹ 5,867.38

    Project A
    Capital Budgeting
    Rate of Interest 10%
    Cost of project -₹ 10,000.00
    Cash Inflows (Year 1) ₹ 3,000.00
    Year 2 ₹ 4,200.00
    Year 3 ₹ 6,800.00
    NPV ₹ 1,307.29
    Capital Budgeting
    Rate of Interest 8%
    Cost of project -₹ 40,000.00
    Cash Inflows (Year 1) ₹ 8,000.00
    Year 2 ₹ 9,200.00
    Year 3 ₹ 10,000.00
    Year 4 ₹ 12,000.00
    Year 5 ₹ 14,500.00
    NPV ₹ 1,922.06

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