A project has positive cash flows of ₹40,000 each year for 5 years, initial outlay ₹1,50,000, cost of capital 10%. NPV is approximately (PVIFA(10%,5) = 3.791):
A₹0
B₹1,640
C₹50,000
D−₹50,000
Answer & Solution
Correct answer: B. ₹1,640
1. PV of inflows = 40,000 × 3.791 = ₹1,51,640.
2. NPV = 1,51,640 − 1,50,000.
3. Result ≈ ₹1,640. Marginally positive — accept.
_Source: ICAI BoS CA Inter Paper 6A, Ch 7 "Investment Decisions", §7_