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JKL Corporation is assessing a project with an initial investment of Rs.2,50,000. The project's lifespan is 5 years, and it will have no salvage value.
JKL Corporation is assessing a project with an initial investment of Rs.2,50,000. The project's lifespan is 5 years, and it will have no salvage value. The expected annual profits after depreciation but before tax are:
- Year 1: Rs. 70,000
- Year 2: Rs. 85,000
- Year 3: Rs. 95,000
- Year 4: Rs. 60,000
- Year 5: Rs. 50,000
Depreciation is calculated at 20% per year on the original cost, and the tax rate is 30%. Calculate the following:
- Payback Period (PBP).
- Accounting Rate of Return (ARR).
- Net Present Value (NPV) and Profitability Index (PI) assuming a discount rate of 11%.
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