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A firm is considering two mutually exclusive investment alternatives, both of which cost Rs.50,000. The firm’s discount rate is 12 percent. The after-tax cash flows associated with each investment are as follow: YearInvestment A (Rs.)Investment (Rs.)110,00010,000215,00012,000310,00020,000415,00015,000520,00025,000REQUIRED :For each alternative, calculate:Payback Period (4)Net Present Value (NPV) (6)Internal Rate of Return (IRR) (8)( You are advised to view the power point slideshow regarding IRR on announcement page to have better understanding of finding IRR.)On the basis of above findings and interpretations, which alternative should be selected and why? (2)
