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The question is whether it is financially wise to invest Rs10,000 today and receive 4
instalments of Rs5000, Rs4000, Rs3500 and Rs3000 if our cost of capital is 10%.
Q. 2 Assume that ABC Inc is considering two projects namely Project X and Project Y and
wants to calculate the NPV for each project. Both project X and project Y is four-year project
and cash flows of both the projects for four years are given below:
1. Rs5000 Rs1000
2. Rs4000 Rs3000
3. Rs3000 Rs4000
4. Rs1000 Rs6750
The firm's cost of capital is 10% for each project and the initial investment amount is
Rs10,000. Calculate the NPV of each project and determine in which project the firm should
invest.
Q.3 Following are the expected cash inflows of the company. The cost of capital is 10%. The
scrap value at the end of 4th year is Rs 2000.
Calculate NPV.
Q4. A company is contemplating purchasing a new mass storage unit for its computer facility.
Its expected cost is Rs 2,00,000 further company estimates Rs 20,000 permanent working
capital. The projected inflows are:
Year 1 2 3 4 5
Cash Inflow 50,000 80,000 1,00,000 80,000 60,000