Difference of CASH flows of Project A and Project B in
year 0=-69000+69000=0
Year 1 =13000-29000=-16000
Year 2 =33000-24000=9000
Year 3 =38000-27000=11000
Cross Over rate using Financial Calculator
CF0=0;CF1=-16000;CF2=9000;CF3=11000;CPT IRR =15.68%
NPV of A at 9% =-69000+13000/1.09+33000/1.09^2+38000/1.09^3
=45.02
NPV of B at 9% =-69000-16000/1.09+9000/1.09^2+11000/1.09^3
=-1345.22
Since NPV of A is higher it should be accepted.
Option d is correct option
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