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MNO Ltd. is planning to invest in a project with the following cash flows: Year Cash Flow (Rs.) 0 -5,00,000 1 1,00,000 2 1,20,000 3

MNO Ltd. is planning to invest in a project with the following cash flows:

Year

Cash Flow (Rs.)

0

-5,00,000

1

1,00,000

2

1,20,000

3

1,50,000

4

1,80,000

5

2,00,000

  • Depreciation: 20% on original cost
  • Tax rate: 35%

Required:

  1. Calculate the Payback Period (PBP) and ARR.
  2. Determine the NPV and NPV Index at a 11% cost of capital.
  3. Compute the IRR.
  4. Evaluate the profitability index.

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