IRRA company is looking for an opportunity to invest ₹1,500 crore, for which it has identified five independent projects. The cash flows and the initial investment requirement of these five projects are as follows (in ₹ crore):  Project 1 Project 2 Project 3 Project 4 Project 5Year 0 (Initial investment) -1,200 -1,500 -700 -700 -300Year 1 500 400 200 300 100Year 2 500 500 250 300 100Year 3 500 600 300 300 100Year 4 500 700 350 300 100Consider the rate of interest as 7.5%.Which of the following projects has the highest IRR ?Project 2Project 1Project 4Project 3Project 5

An investor is considering three projects, A, B and C summarized in the table below.  Investment cost Annual operating profit Project life (years)Project A -70000 17000 5Project B -90000 15000 8Project C -60000 13000 6Suppose the investor can borrow funds at an interest rate of 6%, by using the NPV rule with a 5% discount rate, he should choose project _____. When using the IRR rule, he should ____ this project.

Himalayan Trading House is considering two mutually exclusive investments. The projects expected net cash flows (in million) are as follows: Year 0 1 2 Project A (Rs) (300) (387) (193) (100) 6 3 4 500 850 500 7 100 Problem 3.23. NPV, IRR and PI 134 134 134 134 134 134 0 a. Construct NPV profile of each project. b. What is each project's IRR? c. If you were told that each project's required rate of return was 12 percent, which project should be selected? If the required rate of return was 15 percent, what would the proper choice be? d. Why does conflict exist in project ranking between NPV and IRR method?

IRRThe expected cash flows from the project are as follows :Year 0 1 2 3 4 5 6 Cash flow (₹ lakh) -120 27 43 15 24 25 25Calculate the IRR of the project.15%11%9%12%

There are two projects: project A and project B. Each of the project has the cost of Rs 100,000 and cost of capital for each project is 12 percent. The project's expected net cash flows are as follows: Year Project A Project B 0 Rs (100,000) Rs (100,000) 1 65,000 35,000 2 30,000 30,000 3 30,000 30,000 4 10,000 10,000 a. Calculate NPV for each project. Which project or projects should be accepted if they are independent? b. Calculate IRR for each project. Which project should be accepted if they are mutually exclusive?

Criteria for IRRSuppose you own a small real estate business and want to expand your business profile. You discuss this idea with your financial advisor, and he suggests the following projects/businesses:A logistics business requiring an investment of ₹20,00,000, with an internal rate of return of 18%A bottling plant requiring an investment of ₹5,00,000, with an internal rate of return of 10%A construction project requiring an investment of ₹75,00,000, with an internal rate of return of 22%To invest in any of the projects/businesses mentioned above, you would need to borrow money on credit, for which you have the following options:From the bank at an interest rate of 12%, if the loan amount is less than ₹10,00,000From an NBFC at an interest rate of 15%, if the loan amount is greater than ₹11,00,000 less than ₹50,00,000From institutional investors at an interest rate of 24%, if the loan amount is greater than 51,00,000 and up to ₹1,00,00,000You can choose to borrow from only one of the options given above. Also, you can invest in only one of the projects/businesses.Which investment option will you choose based on the IRR technique of project evaluation?Logistics businessBottling plantConstruction project