Investment proposal under the arr method


Q1. Compute NPV, IRR and Pay Back Period for the projects described below supposing a discount rate of 10% and recommend which is a better option.

Particulars        Project A       Project B
0 Year           (100,000)        (100,000)
1st Year        10,000             8,000
2nd Year       25,000            18,500
3rd Year        45,000            60,000
4th Year        50,000            45,000

Q2. In brief describe how to assess an investment proposal under the ARR method with an appropriate illustration.

Q3. Compute the Pay Back period for the project described below:

COL – 100,000

YEAR      CFs
1        20,000
2        33,000
3        45,000
4        18,000
5        20,000
6        60,000

Question 4: Determine the ARR of the Project with a average Cash Inflow of Rs.20,000 and average Investment of Rs. 200,000?

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Project Management: Investment proposal under the arr method
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