Company A is considering a major expansion of its business. The details of the proposed expansion project are summarized below

The company will have to purchase Rs.10, 00,000 in equipment at t = 0.

The project has an economic life of four years.

The cost can be depreciated on a straight line depreciation over 4 years

At t = 0, the project requires that inventories increase by Rs.1,00,000 and accounts payable increase by Rs.50,000. The change in net operating working capital is expected to be fully recovered at t = 4.

The equipments salvage value at the end of four years is expected to be Rs.0.

The company forecasts that the project will generate Rs.16,00,000 in sales the first two years (t = 1 and 2) and Rs.10,00,000 in sales during the last two years (t = 3 and 4).

Each year the projects operating costs excluding depreciation are expected to be 60 percent of sales revenue.

The companys tax rate is 40 percent.

The projects cost of capital is 10 percent.

Please derive the cash flows. Suggest whether the project should be undertaken or not on the basis of NPV, IRR and MIRR