You are a financial analyst for the Gaurishanker Herbal Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Project X and Project Y. These projects…

You are a financial analyst for the Gaurishanker Herbal Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Project X and Project Y. These projects are mutually independent projects. Each project has a cost of Rs 100,000 and the cost of capital for each project is 10 percent. The expected net cash flows are as follows: YearExpected Net Cash FlowsProject XProject Y0(Rs 100,000)(Rs 100,000)140,00050,000240,00060,000340,00040,000440,00018,000 a. Calculate PBP of each project. If firm has set a maximum payback period of three years, suggest as to which project's should be accepted? b. Calculate net present value (NPV) of each project. Which project's should be accepted? c. Calculate the internal rates of return (IRR) of each project's. Evaluate the project on the basis of IRR. d. Which method of evaluating the project is superior? Why?