QRS Ltd is considering the acquisition of a new fleet of delivery trucks costing $800,000 The trucks have a useful life of 6 years and are expected to generate annual net savings of $160,000 The company's cost of capital is 13 Present value factors are Year PV Factor at 13 1 0 885 2 0 783 3 0 693 4 0 613 5 0 543 6 0 482 Requirements Calculate the total present value of the savings Determine the NPV Compute the payback period Calculate the IRR Assess whether the investment should be made FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscriptFont Family Arial Georgia Impact Tahoma Times New Roman Verdana Font Size 8 9 10 11 12 14 18 24 30 36 48 60 72 96 Inline Style Big Red Small Blue Paragraph Style Gray Bordered Spaced Uppercase Paragraph Format Normal Heading 1 Heading 2 Heading 3 Heading 4 Code Align Align Left Align Center Align Right Align Justify Ordered ListUnordered ListDecrease IndentIncrease IndentInsert ImageInsert TableSpecial CharactersInsert Horizontal LineSelect AllClear FormattingUndoRedo Clear Formatting Selected Clear FormattingUnlicensed copy of the Froala Editor Use it legally by purchasing a license Type something A company is considering the purchase of new machinery costing Rs 500 lakhs The expected earnings (before depreciation and taxes) over the next five years are as follows Year Earnings (Rs in lakhs) 1 140 2 160 3 170 4 190 5 180 The cost of raising the capital is 10 , and the machinery will depreciate at 15 on a Written Down value basis The scrap value at the end of five years is estimated at Rs 100 lakhs Assume zero income tax Requirements Calculate the net present value (NPV) of the project Calculate the internal rate of return (IRR) of the project Determine the payback period of the project Evaluate the profitability index Advise the management on whether to proceed with the project based on your calculations

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QRS Ltd is considering the acquisition of a new fleet of delivery trucks costing $800,000. The trucks have a useful life of 6 years and

QRS Ltd is considering the acquisition of a new fleet of delivery trucks costing $800,000. The trucks have a useful life of 6 years and are expected to generate annual net savings of $160,000. The company's cost of capital is 13%. Present value factors are:

Year	PV Factor at 13%
1	0.885
2	0.783
3	0.693
4	0.613
5	0.543
6	0.482

Requirements:

Calculate the total present value of the savings.
Determine the NPV.
Compute the payback period.
Calculate the IRR.
Assess whether the investment should be made.

FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscriptFont FamilyFont SizeInline StyleParagraph StyleParagraph FormatAlignOrdered ListUnordered ListDecrease IndentIncrease IndentInsert ImageInsert TableΩSpecial CharactersInsert Horizontal LineSelect AllClear FormattingUndoRedo????????Clear Formatting????Selected Clear FormattingUnlicensed copy of the Froala Editor. Use it legally by purchasing a license.

Type something

A company is considering the purchase of new machinery costing Rs. 500 lakhs. The expected earnings (before depreciation and taxes) over the next five years are as follows:

Year	Earnings (Rs. in lakhs)
1	140
2	160
3	170
4	190
5	180

The cost of raising the capital is 10%, and the machinery will depreciate at 15% on a Written Down value basis. The scrap value at the end of five years is estimated at Rs. 100 lakhs. Assume zero income tax.

Requirements:

Calculate the net present value (NPV) of the project.
Calculate the internal rate of return (IRR) of the project.
Determine the payback period of the project.
Evaluate the profitability index.
Advise the management on whether to proceed with the project based on your calculations.