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
Answer & Explanation
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