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1. MCARTECH Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows: Expected Cash Flows Year Project A 0 1 2 3 4 5 6
Project B -500 100 110 120 175 240 300
-875 150 200 250 375 530 680
a. If you were told that each project’s cost of capital was 12%, which project should be selected using the NPV criteria? b. What is the profitability index for each project if the cost of capital is 12%? c. What is the regular payback period for these two projects? 2. Assume that you plan to take a housing loan with a tenor of 20 year. The loan has to be repaid in equal monthly installments. Considering that the loan amount is Rs. 50 lakhs and the interest rate on loan is 9% p.a., what would be the equated monthly installment (EMI)?