A company is evaluating a proposal to invest Rs. 5,50,000 in a new IT infrastructure. The infrastructure has a useful life of 6 years and no salvage value. It will generate annual net operating income after depreciation of Rs. 70,000. The company’s tax rate is 25%. The present value factors for 6 years are provided below:

Present Value Factors:

Discounting Rate	Cumulative Factor
8%	4.62
10%	4.35
12%	4.11
14%	3.89
16%	3.69

Requirements:

1. Determine the annual net cash inflow after tax.
2. Calculate the present value of the cash inflows at each discount rate.
3. Compute the NPV at each discount rate.
4. Find the IRR of the proposal.
5. Evaluate if the IT infrastructure should be invested in if the required rate of return is 14%.

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Type somethingQuestion 1

A company is evaluating the potential investment in a new project that requires an initial investment of Rs. 500 lakhs. The projected earnings before depreciation and taxes are as follows:

Year	Earnings (Rs. in lakhs)
1	200
2	220
3	240
4	260
5	280

The cost of capital is 10%, and the assets will depreciate at 15% on a written-down value basis. The scrap value at the end of the five years is Rs. 100 lakhs. The company is subject to a tax rate of 30%.

Required:

1. Calculate the net present value (NPV) of the project.
2. Determine the internal rate of return (IRR) of the project.
3. Compute the payback period of the project.
4. Assess whether the project is financially viable.