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DEF Corporation plans to invest Rs. 3,00,000 in a new project. The project is expected to generate the following profits: Year 1 2 3 4
DEF Corporation plans to invest Rs. 3,00,000 in a new project. The project is expected to generate the following profits:
Year | 1 | 2 | 3 | 4 | 5 |
Rs. | 70,000 | 85,000 | 95,000 | 1,00,000 | 1,20,000 |
The project will be depreciated on a straight-line basis over 5 years. The corporate tax rate is 30%.
Required:
- Calculate the Annual Rate of Return.
- Determine the Payback Period.
- Calculate the Net Present Value (NPV) using a discount rate of 10%.
- Find the Internal Rate of Return (IRR).
- Assess the project's viability based on NPV and IRR.
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