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ABC Corporation is considering an investment project with the following cash flows: Year Cash Flow (Rs.) 0 -2,50,000 1 60,000 2 70,000 3 80,000 4

ABC Corporation is considering an investment project with the following cash flows:

Year

Cash Flow (Rs.)

0

-2,50,000

1

60,000

2

70,000

3

80,000

4

90,000

5

1,20,000

  • Depreciation: 20% on original cost
  • Tax rate: 35%

Required:

  1. Calculate the Payback Period (PBP) and ARR.
  2. Calculate the NPV and NPV Index if the cost of capital is 8%.
  3. Compute the IRR.
  4. Determine the project’s profitability index.

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