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A manufacturing firm is considering the following project: Initial investment: Rs. 600 lakhs Earnings (before depreciation and taxes) for five years: Rs. 180 lakhs, 190
A manufacturing firm is considering the following project:
- Initial investment: Rs. 600 lakhs
- Earnings (before depreciation and taxes) for five years: Rs. 180 lakhs, 190 lakhs, 200 lakhs, 210 lakhs, and 220 lakhs
- Depreciation: 10% on a Written Down Value basis
- Scrap value at the end of five years: 30%
- Cost of raising capital: 9%
- Income tax rate: 30%
Requirements:
- Calculate the NPV.
- Calculate the IRR.
- Calculate the payback period.
- Determine the profitability index.
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