Vanijya Classes
Back to Case Studies

The Capital Budgeting Decision

The Project Proposals
A fork in the road, symbolizing a choice

You are a financial analyst at 'Growth Corp'. The company has a budget of ₹50,00,000 for a new project and must choose between two mutually exclusive options. Project A is an expansion of the current product line. Project B is an investment in new, innovative technology. The company's cost of capital (discount rate) is 10%.

When evaluating mutually exclusive projects, which capital budgeting method is generally considered superior and why?