A company is considering two mutually exclusive investment proposals. Their expected cash flow streams are...

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Accounting

A company is considering two mutually exclusive investment proposals. Their
expected cash flow streams are given as follows:
Year Proposal X (Rs.) Proposal Y (Rs.)0-5,00,000-7,00,00011,45,0001,00,00021,45,0001,10,00031,45,0001,30,00041,45,0001,50,00051,45,0001,60,00061,45,0001,50,0007-----1,20,0008-----1,20,0009-----1,10,000
10-----1,00,000
The company employs risk adjusted method of evaluating risky projects and selects
the appropriate required rate of return as follows:
Project Pay back Required Rate of Return
Less than 1 year 8%
1
5 years 10%
5
10 years 12%
Over 10 years 15%
Which proposal should be acceptable to the company?

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