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LMN Enterprises is planning to purchase one of two machines. The company's cost of capital is 14% and the tax rate is 28%. Details are

  • LMN Enterprises is planning to purchase one of two machines. The company's cost of capital is 14% and the tax rate is 28%. Details are given below:

Particulars

Machine X

Machine Y

Cost of machine

18,00,000

22,00,000

Expected life

4 years

4 years

Annual Income (before Tax & Depreciation)

5,00,000

6,75,000

Depreciation is charged on a straight-line basis. You are required to calculate: a. Internal Rate of Return (IRR) b. NPV c. Payback period

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