Determine which is the most profitable

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Problem 1: Rajan textiles is considering two investments each of which requires an initial investment of Rs. 18,00,000. The total cash inflow, that is profits after taxes and depreciation charges, for each project are :

Year          1             2               3          4                5        6             7

Project X 30,000   50,000  60,000   65,000 40,000     30,000      16,000

Project Y 60,000 1,00,000   65,000 45,000

Question 1: Rajan's cost of capital is 8% Rank these investments by their excess present value. Which is the most profitable?

Reference no: EM132468415

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