STU Inc. is evaluating a new investment project requiring an initial outlay of Rs. 2,00,000. The project is expected to generate the following annual profits before tax and after depreciation:

• Year 1: Rs. 70,000
• Year 2: Rs. 65,000
• Year 3: Rs. 60,000
• Year 4: Rs. 55,000
• Year 5: Rs. 50,000

The project will be depreciated at 20% on the original cost. The company’s tax rate is 29%, and the discount rate is 8%.

Required:

• Calculate the PBP and ARR.
• Compute the NPV and IRR.
• Determine the profitability index.
• Evaluate the impact of a 10% increase in the discount rate on NPV.
• Assess the sensitivity of the project to changes in the annual profit by ±10%.