A company is considering the proposals of taking up a new project which requires an investment of Rs. 417 lakhs on machinery and other assets. The project is expected to yield the following earnings (before depreciation and taxes) over the next five years:

Year	1	2	3	4	5
Earnings (Rs. in lakhs)	178	151	174	190	162

The cost of raising the additional capital is 11.97% and assets have to be depreciated at 19.54% on Written Down Value basis. The scrap value at the end of the five years is 55 lakhs. Period may be taken as zero income tax applicable to the company is 26%.

Required:

1. Calculate the net present value of the project and advise management to take the appropriate decision.
2. Calculate the internal rate of return of the project.
3. Determine the payback period of the project.
4. Assess the impact of depreciation on the project's cash flows.
5. Evaluate the sensitivity of NPV to changes in the cost of capital.