Cost of preference equity-irr , Financial Management

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1. Find out the present value of Rs. 10,000 to be required after 4 years if the interest rate is 6%.

2. A Firm can invest Rs. 10,000 in a project with a life of three years.

The projected cash inflow are as follows:

Year	1	2	3
Cash inflows(Rs.)	4,000	5,000	4,000

The cost of capital is 10 % p.a. Should the investment be made ?

[ Hint : DCF @ 10%, for 1^st year =0.909, for IInd year = 0.826, IIIrd Year = 0.751 ]

Write short notes on the following:

3. IRR

4. Cost of preference Equity

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