JKL Corp. is planning to invest in a new project with an initial cost of Rs. 4,00,000 and no salvage value. The expected profits after depreciation but before tax over the project’s life of 5 years are:

• Year 1: Rs. 90,000
• Year 2: Rs. 85,000
• Year 3: Rs. 80,000
• Year 4: Rs. 75,000
• Year 5: Rs. 70,000

The project will be depreciated at 10% on the original cost, and the tax rate is 33%.

Required:

• Calculate the PBP and ARR.
• Compute the NPV and PI, assuming a discount rate of 11%.
• Determine the IRR for the project.
• Evaluate the impact of a 20% decrease in profits on the project’s NPV.

Conduct a sensitivity analysis with a tax rate of 25%.