A company is considering the installation of a new manufacturing plant with a capital cost of Rs. 8,00,000. The plant has an expected life of 10 years with no salvage value. It will produce annual net operating income after depreciation of Rs. 1,10,000. The tax rate for the company is 33%. Present value factors for 10 years are as follows:

Present Value Factors:

• 8%: 6.71
• 10%: 6.14
• 12%: 5.65
• 14%: 5.22
• 16%: 4.79

Requirements:

1. Calculate the annual net cash inflow after tax.
2. Compute the present value of the cash inflows at each discount rate.
3. Calculate the NPV at each discount rate.
4. Find the IRR of the plant.
5. Decide if the plant should be installed if the company’s required rate of return is 12%.