6. Equipment A has a cost of Rs.75,000 and net cash flow of
Rs.20000 per year for six years. A substitute equipment B
would cost Rs.50,000 and generate net cash flow of
Rs.14,000 per year for six years. The required rate of
return of both equipments is 11 per cent. Calculate the IRR
and NPV for the equipments. Which equipment should be
accepted and why?
Answer Posted / w.a
npv of equipment A= Rs 9610.76
npv of equipment B= Rs 9227.53
hence, equipment A should be accepted because it generates
a higher NPV value than equipment A.
Is This Answer Correct ? | 45 Yes | 12 No |
Post New Answer View All Answers
Why you quite your job in six months??
What is the formula to calculate enterprise value?
What is the key difference between private sector banks and the government sector banks?
What is 'revenue of central government'?
Define Banking and what are the other services provided by the banks?
Why convertible securities are more attractive to investors?
"NO CONSIDERATION, NO CONTRACT" EXPLAIN WITH EXCEPTION.
What does GSLV stand for?
What is NEFT?
What is kyc? Why is it important?
What do you mean by cin and what specification does it contain?
What propositions should be kept in mind while working with debtors turnover ratio?
What is the instrument that cannot be transferred from one person to another by endorsement.
What is the difference between Miss and Mistress?
WHAT AMOUNT TAKEN IF THE COMPANY GET ASSET FREE?