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B Ltd. is evaluating a project that requires an initial investment of Rs.5,00,000. The project is expected to generate the following annual cash flows: Year
B Ltd. is evaluating a project that requires an initial investment of Rs.5,00,000. The project is expected to generate the following annual cash flows:
Year | Cash Flow (Rs.) |
1 | 1,50,000 |
2 | 2,00,000 |
3 | 1,75,000 |
4 | 1,50,000 |
5 | 1,25,000 |
The project will be depreciated on a straight-line basis over its life with no salvage value. The company's tax rate is 30% and the required rate of return is 10%.
Required:
- Calculate the Payback Period.
- Calculate the ARR.
- Compute the NPV.
- Determine the Profitability Index.
- Calculate the IRR.
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