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GHI Enterprises is planning to undertake a project requiring an initial outlay of Rs.6,00,000. The project will generate the following cash inflows: Year Cash Inflows
GHI Enterprises is planning to undertake a project requiring an initial outlay of Rs.6,00,000. The project will generate the following cash inflows:
Year | Cash Inflows (Rs.) |
1 | 2,00,000 |
2 | 1,80,000 |
3 | 1,50,000 |
4 | 1,20,000 |
5 | 1,00,000 |
The depreciation rate is 20% on the original investment, and the company’s tax rate is 28%.
You need to:
- Compute the Payback Period (PBP).
- Calculate the Accounting Rate of Return (ARR).
- Determine the Net Present Value (NPV) and Profitability Index (PI) at a cost of capital of 9%.
- Calculate the Internal Rate of Return (IRR).
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