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An enterprise is considering a capital investment of Rs. 700 lakhs. The projected annual cash flows from the investment are as follows: Year Cash Flow
An enterprise is considering a capital investment of Rs. 700 lakhs. The projected annual cash flows from the investment are as follows:
Year | Cash Flow (Rs. in lakhs) |
1 | 160 |
2 | 180 |
3 | 200 |
4 | 220 |
5 | 240 |
6 | 260 |
The discount rate applicable is 15%, and the depreciation is calculated using the declining balance method at a rate of 25%. The asset's residual value is Rs. 90 lakhs.
Required:
- Calculate the net present value (NPV).
- Determine the internal rate of return (IRR).
- Calculate the payback period.
- Compute the annual depreciation expenses.
- Evaluate the project's overall financial feasibility.
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