XYZ Ltd. is evaluating two mutually exclusive projects. The company's cost of capital is 14%...
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Accounting
XYZ Ltd. is evaluating two mutually exclusive projects. The company's cost of capital is 14% and the tax rate is 32%. Details for both projects are as follows:
Particulars | Project P | Project Q |
Cost of project | 13,50,000 | 16,00,000 |
Expected life | 4 years | 4 years |
Annual Income (before Tax & Depreciation) | 4,25,000 | 5,25,000 |
Depreciation is charged on a straight-line basis. You are required to calculate: a. Discounted payback period b. NPV c. Profitability index
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