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Question No.85

Hammad Inc is considering two alternative mutually exclusive-00085

Online Quiz This subjective question is related to the book/course vu bif501 Bioinformatics II. It can also be found in vu bif501 Mid Term Solved Past Paper No. 1.

Question 1: Hammad Inc. is considering two alternative, mutually exclusive projects. Both projects require an initial investment of Rs. 10,000 and are typical, average-risk projects for the firm. Project A has an expected life of 2 years with after-tax cash inflow of Rs. 6,000 and Rs. 8,000 at the end of year 1 and 2, respectively. Project B has an expected life of 4 years with after-tax cash inflow of Rs. 4,000 at the end of each of next 4 years. The firm's cost of capital is 10 percent. If the projects cannot be repeated, which project will be selected, and what is the net present value?
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