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    A firm is considering replacing a computer system with a new one. Purchase price of new computer is Rs. 80,000. 00 and its installation costs are Rs. 1,000.00. The cash flow from the sale of the old computer is expected to be Rs. 20,000.00. The CFAT, after the installation of the new computer is expected to be Rs. 15,000.00 each year for five years. T he Salvage value at the end of 5 years has been calculated as Rs. 20,000.00. Should the proposal of replacing the computer be accepted on the basis of NPV as a decision criteria discounted @ 12%. What is Profitability Index (P.I) is used as decision criteria?

    2. Discuss the role of IRR, NPVR and pay back period as alternative Investment criteria. A perfect requires an investment of $ 2.0 million at the end of tenth year. The capital cost (discount rate) of the project financing is estimated to be 10 %

    a) What is the pay back period?

    b) Using NPV as appraisal criterion, would your accept or reject the period

    c) If IRR were used as decision criterion, would you get the same result as in (b)? Why or Why not?
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    plzzzzzzzzzzzzzzzzzzzzz answer the question
 
 
 
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