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A company is evaluating a project that requires an initial investment of 800 lakhs and is expected to generate the following cash inflows: Year Cash
A company is evaluating a project that requires an initial investment of ₹800 lakhs and is expected to generate the following cash inflows:
Year | Cash Flow (₹ in lakhs) |
1 | 180 |
2 | 200 |
3 | 220 |
4 | 240 |
5 | 260 |
6 | 280 |
The project has a discount rate of 18%. Depreciation is applied on a straight-line basis over the project's life, and the salvage value is ₹50 lakhs.
Required:
- Calculate the NPV of the project.
- Determine the IRR.
- Compute the Payback Period.
- Assess the impact of a 10% decrease in initial investment on the project's NPV and IRR.
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