Mahesh enterprises is considering of purchasing a cnc


Question: Mahesh Enterprises is considering of purchasing a CNC Machine. The following are the earnings after tax from the two alternative proposals under consideration each costing Rs. 8, 00,000. Select the better one, if the company wishes to operate at 10% rate of return.

Year 1

Year 2

Year 3

Year 4

Year 5

Proposal I

80000

240000

320000

480000

320000

Proposal II

240000

320000

400000

240000

160000

Present value of Re @ 10%

0.909

0.826

0.751

0.683

0.620

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