vu bif501 Mid Term Subjective Solved Past Paper No.2
vu bif501 Bioinformatics II Solved Past Papers
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| Year | Project A | Project B |
| 0 | Rs. (20,000) | Rs. 24,000 |
| 1 | 10,000 | 10,000 |
| 2 | 8,000 | 10,000 |
| 3 | 6,000 | 10,000 |
- Assume that 15% is the appropriate required rate of return. What decision should the firm make about these two projects?
- If the firm reevaluated these projects at 10%, what decision should the firm make about these two projects?
Project A, Io= -Rs20000, Yr1 = +Rs10000, Yr2= Rs8000, Yr3= Rs6000
Project B, Io= -Rs24000, Yr1= +Rs10000, Yr2=Rs10000, yr3=Rs10000
In simple NPV =
Project A=-20000+10000+8000+6000/(1.15)^3 = Rs2630.19
Project B= -24000+10000+10000+10000/(1.15)^3 = Rs 3945.29
The firm will decide to take the 2nd project B. becz its NPV is greater tha project A.
