Company A is planning to invest in a new machinery. The initial cost of the machinery is Rs.3,50,000. The machinery will have a life of 4 years with no salvage value. The expected annual profits after depreciation but before tax are given below:

• Year 1: Rs. 90,000
• Year 2: Rs. 1,20,000
• Year 3: Rs. 95,000
• Year 4: Rs. 85,000

The company uses straight-line depreciation. The tax rate is 25%. The company requires a 12% return on its investments.

Required:

1. Calculate the Payback Period (PBP) and Accounting Rate of Return (ARR).
2. Compute the Net Present Value (NPV) and Profitability Index (PI).
3. Determine the Internal Rate of Return (IRR).
4. Assess if the investment should be undertaken based on NPV and IRR.