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PQR Corporation is considering a project with an initial investment of Rs.3,75,000. The project is expected to generate the following cash flows: Year 1: Rs.

PQR Corporation is considering a project with an initial investment of Rs.3,75,000. The project is expected to generate the following cash flows:

  • Year 1: Rs. 1,00,000
  • Year 2: Rs. 1,20,000
  • Year 3: Rs. 1,30,000
  • Year 4: Rs. 90,000
  • Year 5: Rs. 80,000

The company uses straight-line depreciation. The tax rate is 25% and the discount rate is 10%.

Required:

  1. Calculate the Payback Period.
  2. Determine the ARR.
  3. Compute the NPV.
  4. Calculate the Profitability Index.
Determine the IRR.

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