alleryStart learning →Project X has PI 1.2 on Rs 2,00,000 and project Y has PI 1.1 on Rs 5,00,000. Which NPV is larger?
AX, at Rs 40,000
BY, at Rs 50,000
CX, at Rs 20,000
DBoth Rs 40,000
Answer & Solution
Correct answer: B. Y, at Rs 50,000
X gives 0.2 x 200,000 = 40,000 while Y gives 0.1 x 500,000 = Rs 50,000, so a lower PI can still carry the higher NPV.
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