Lambda Ltd is evaluating a project with the following parameters:
•Initial Investment: Rs.4,50,000
•Project Life: 5 years, no salvage value
•Profits after depreciation and before tax: Rs. 1,20,000, Rs. 1,30,000, Rs. 1,10,000, Rs. 90,000, Rs. 80,000
•Depreciation: 20% per annum
•Tax Rate: 30%
•Requirements:
1.Calculate Payback Period (PBP)
2.Compute ARR
3.Determine NPV at 8% cost of capital
4.Find IRR
5.Compute PI