JKL Services is evaluating a new service line. The relevant details are:

• Initial Investment: INR 500,000
• Project Life: 6 years
• Salvage Value: INR 50,000
• Depreciation Method: Double declining balance
• Cost of Capital: 16%

Yearly Cash Flows:

Year	Cash flow
1	100,000
2	150,000
3	200,000
4	250,000
5	300,000
6	350,000

a) What is the time value of money and why is it important?

b) Compare and contrast NPV and IRR.

c) Calculate the following using the provided data: i) Annual depreciation using the double declining balance method. ii) Payback period. iii) NPV of the project. iv) IRR of the project. v) Profitability index.