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STU Ltd is considering a project that requires an initial investment of Rs.3,00,000. The project will generate annual cash inflows of Rs.90,000 for 6 years.
STU Ltd is considering a project that requires an initial investment of Rs.3,00,000. The project will generate annual cash inflows of Rs.90,000 for 6 years. The project will be depreciated at 25% per year on the original cost. The company is subjected to a 33% tax rate. Required:
a. Calculate Payback Period and ARR
b. Calculate NPV and PI, assuming the discount rate is 12%
c. Determine the IRR
d. Analyze the project's sensitivity to the cost of capital
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