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RST Ltd. is considering a project with the following details: Year Cash Flow (Rs.) 0 -6,00,000 1 1,20,000 2 1,50,000 3 1,80,000 4 2,10,000 5

RST Ltd. is considering a project with the following details:

Year

Cash Flow (Rs.)

0

-6,00,000

1

1,20,000

2

1,50,000

3

1,80,000

4

2,10,000

5

2,40,000

  • Depreciation: 25% on original cost
  • Tax rate: 20%

Required:

  1. Calculate Payback Period (PBP) and ARR.
  2. Determine NPV and NPV Index at a 12% cost of capital.
  3. Compute the IRR.
  4. Evaluate the profitability index.

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