1. Find out the present value of Rs. 10,000 to be required after 4 years if the interest rate is 6%.
2. A Firm can invest Rs. 10,000 in a project with a life of three years.
The projected cash inflow are as follows:
Year
1
2
3
Cash inflows(Rs.)
4,000
5,000
The cost of capital is 10 % p.a. Should the investment be made ?
[ Hint : DCF @ 10%, for 1^{st} year =0.909, for IInd year = 0.826, IIIrd Year = 0.751 ]
Write short notes on the following:
3. IRR
4. Cost of preference Equity