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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:

  1. Calculate the Payback Period.
  2. Calculate the ARR.
  3. Compute the NPV.
  4. Determine the Profitability Index.
  5. Calculate the IRR.

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