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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:

  1. Calculate the Annual Rate of Return.
  2. Determine the Payback Period.
  3. Calculate the Net Present Value (NPV) using a discount rate of 10%.
  4. Find the Internal Rate of Return (IRR).
  5. Assess the project's viability based on NPV and IRR.

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