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Company Q is considering a new project that requires an initial investment of Rs.2,80,000. The project is expected to generate the following cash inflows: Year

Company Q is considering a new project that requires an initial investment of Rs.2,80,000. The project is expected to generate the following cash inflows:

  • Year 1: Rs. 70,000
  • Year 2: Rs. 80,000
  • Year 3: Rs. 75,000
  • Year 4: Rs. 60,000
  • Year 5: Rs. 55,000

The project will be depreciated on a straight-line basis over its life. The tax rate is 30% and the discount rate is 9%.

Required:

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

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