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 companys 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 Determine the annual net cash inflow after tax Calculate the present value of the cash inflows at each discount rate Compute the NPV at each discount rate Find the IRR of the proposal Evaluate if the IT infrastructure should be invested in if the required rate of return is 14 FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscript Font Family Arial Georgia Impact Tahoma Times New Roman Verdana Font Size 8 9 10 11 12 14 18 24 30 36 48 60 72 96 Inline Style Big Red Small Blue Paragraph Style Gray Bordered Spaced Uppercase Paragraph Format Normal Heading 1 Heading 2 Heading 3 Heading 4 Code Align Align Left Align Center Align Right Align Justify Ordered ListUnordered ListDecrease IndentIncrease Indent Insert ImageInsert TableSpecial CharactersInsert Horizontal LineSelect AllClear Formatting UndoRedo Clear Formatting Selected Clear Formatting Unlicensed copy of the Froala Editor Use it legally by purchasing a license 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 Calculate the net present value (NPV) of the project Determine the internal rate of return (IRR) of the project Compute the payback period of the project Assess whether the project is financially viable

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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

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:

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

FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscript
Font FamilyFont SizeInline StyleParagraph Style
Paragraph FormatAlignOrdered ListUnordered ListDecrease IndentIncrease Indent
Insert ImageInsert TableΩSpecial CharactersInsert Horizontal LineSelect AllClear Formatting
UndoRedo
????????Clear Formatting
????Selected Clear Formatting

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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: