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MNO Ltd. has the following projected cash flows for a new project: Year Cash Inflows (Rs.) 1 1,25,000 2 1,10,000 3 1,40,000 4 1,20,000 5

MNO Ltd. has the following projected cash flows for a new project:

Year

Cash Inflows (Rs.)

1

1,25,000

2

1,10,000

3

1,40,000

4

1,20,000

5

1,00,000

The initial cost of the project is Rs.3,50,000, depreciated at 20% per annum. The tax rate is 25%.

Tasks:

  1. Calculate the Payback Period (PBP) and Accounting Rate of Return (ARR).
  2. Compute the Net Present Value (NPV) and Profitability Index (PI) with a 10% discount rate.
  3. Determine the Internal Rate of Return (IRR).

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