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Rao & Rao Corporation is considering investing in a project requiring a capital outflow of Rs.2,00,000. Forecast of net income and cash inflows are given
Rao & Rao Corporation is considering investing in a project requiring a capital outflow of Rs.2,00,000. Forecast of net income and cash inflows are given below: Forecasted Cost of Capital of the project is 10%.
Year
1 2 3
Net Income
85,000 90,000 95,000
Cash Inflows
70,000 75,000 66,000
4 80,000
5 40,000
You are required to compute the following
a. Pay-Back period method
b. Accounting Rate of Return
66,000 20,000
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