The image contains a table and questions about two mutually exclusive projects, X and Y. The projects have associated costs and cash inflows over a 5-year period, with the requirement to compute the following:

1. Net Present Value (NPV) at 10%.
2. Profitability Index (PI).
3. Internal Rate of Return (IRR).

Details of Projects X and Y:

• Cost: Both Project X and Project Y have an initial cost of ₹70,000.
• Cash Inflows:
  • Project X:
    • Year 1: ₹10,000
    • Year 2: ₹20,000
    • Year 3: ₹30,000
    • Year 4: ₹45,000
    • Year 5: ₹60,000
  • Project Y:
    • Year 1: ₹50,000
    • Year 2: ₹40,000
    • Year 3: ₹20,000
    • Year 4: ₹10,000
    • Year 5: ₹10,000

Required Calculations:

1. NPV Calculation:

   • NPV is calculated by discounting future cash flows to the present value using the formula: $\text{NPV} = \sum \frac{C_t}{(1 + r)^t} - C_0$ Where:
   • $C_t$ = Cash inflow at time $t$
   • $r$ = Discount rate (in this case, 10%)
   • $C_0$ = Initial cost
   • You must calculate the NPV for each project at 10% cost of capital.

2. Profitability Index (PI):

   • Profitability Index is calculated as: $\text{PI} = \frac{\text{Present Value of Cash Inflows}}{\text{Initial Investment}}$

3. Internal Rate of Return (IRR):

   • IRR is the rate at which NPV equals 0, so you solve for $r$ in the NPV formula where: $\sum \frac{C_t}{(1 + r)^t} - C_0 = 0$

The given solutions:

• NPV for X is ₹46,135, and for Y is ₹36,550.
• PI for X is 1.659, and for Y is 1.522.
• IRR for X is 27.2%, and for Y is 37.58%.

Would you like me to calculate and show the detailed steps for each of these values?

Here are 5 questions to help you explore further:

1. How is the profitability index useful for project selection?
2. Why is IRR an important metric for project evaluation?
3. What are the limitations of using NPV for project comparison?
4. How does changing the discount rate affect the NPV?
5. Can you have a negative NPV and still choose the project?

Tip: When comparing mutually exclusive projects, it is crucial to consider the scale of the projects along with their IRR and NPV to avoid overestimating the benefits of smaller projects with higher IRR.