ABC Pvt. Ltd. is considering an investment in a new product line with a project life of 10 years. The project is set to be established in a Special Economic Zone (SEZ), qualifying for a one-time tax-free subsidy from the state government of Rs. 30,00,000 on capital investments. Initial equipment cost will be Rs. 2.5 crores. Additional equipment costing Rs. 15,00,000 will be purchased at the end of the fourth year from the cash inflow of that year.

At the end of 10 years, the original equipment will have no resale value, but additional equipment can be sold for Rs. 1,50,000. A working capital of Rs. 25,00,000 will be needed and will be released at the end of the tenth year. The projects will be financed with a mix of equity and debt capital. The sales volumes over ten years have been estimated as follows:

Year	1	2	3	4	5	6	7	8	9	10
Units	80,000	1,20,000	2,80,000	3,00,000	2,00,000	1,80,000	2,50,000	3,20,000	3,50,000	4,00,000

• A selling price of Rs. 140 per unit is expected, and variable expenses will amount to 65% of sales revenue. Fixed cash operating costs will amount to Rs. 2,00,000 per year.
• The loss of any year will be set off from the profits of the subsequent two years.
• The company is subject to 35% corporate tax rate and considers 10% to be an appropriate after-tax cost of capital for this project. The company follows the straight-line method of depreciation.

Required:

1. Calculate the Net Present Value (NPV) of the project.
2. Compute the Internal Rate of Return (IRR) for the project.
3. Determine the payback period for the project.
4. Assess the profitability index (PI) for the project.
5. Advise the management on whether to proceed with the project based on the calculated metrics.