After considering a survey that cost Rs. 300000 X Ltd., decided to undertake a project putting a new product in the market. The company’s cut off rate is 12%. It was estimated that the project would have a life of 5 years. The project would cost Rs 60, 00,000 in p& M in addition to working capital of Rs. 15, 00,000. The machine has no scrap value at the end of 5 years. After providing depreciation on straight line basis, profits after tax were estimated as follows:

Year Amount                         (Rs.)

1                                               6,00,000

2                                               10,00,000

3                                               26,00,000

4                                               10,00,000

5                                               8,00,000
Questions:
a. Calculate the initial, operating and terminal cash flows.
b. Calculate the NPV and IRR. Comment if the project should be accepted or not