Tashkent NON $($TNON$)$ is a new business that is meant to be set up on $1$ January $2024.$ The founders believe that its location neat Chilanzor Metro will be accessible to MDIST students and nearby residents. $6$ Year projections for the business are provided as follows;

a$.$ The project will be financed by borrowing $$9,000$ at $12\%$ interest per annum.

b$.$ The required rate of return for the project is $10\%.$

c$.$ The new equipment costs $ $8,000$ and is usable for $6$ years.

d$.$ $$500$ has been already spent on confirming the legal feasibility of the business idea.

e$.$ Direct costs of material and labour will amount to $50\%$ of revenue each year.

f$.$ Working capital requirement in total have been estimated as follows; $$800$ at start increasing at the rate of $$50$ per year till start of year $6.$

g$.$ All $$1050$ working capital will be released $/$recovered at the end of project.

h$.$ TNON is expected to generate cash revenue of $$5,000$ in the first year and increasing at the rate $20\%$ each year on previous year from the second year onwards till year $6.$

i$.$ TNON will have to incur fixed cost of $$900$ in the first year and increasing at the rate of $$150$ per year from the second year onwards till year $6$ directly as a result of this project.

j$.$ The equipment can be sold at $ $300$ at the end of its useful life.

k$.$ Annual tax payment for this project is expected to be $$200$ for first year and growing at a rate of $$75$ per each year due to higher profits and $/$ or tax rate.

ii$)$ Calculate $($with detailed workings$)$;

a$)$ Accounting Rate of Return $($on initial investment$)$

b$)$ Payback Period

c$)$ Discounted payback period.

d$)$ Net Present Value

e$)$ Profitability Index

f$)$ Internal Rate of Return $($IRR$).($Use $10\%$ & $20\%$ to approximate IRR$)$

Year $123456$

PV $10\%0\mathrm{.}90910\mathrm{.}82640\mathrm{.}75130\mathrm{.}68300\mathrm{.}62090\mathrm{.}5645$

PV $20\%0\mathrm{.}83330\mathrm{.}69440\mathrm{.}57870\mathrm{.}48230\mathrm{.}40190\mathrm{.}3349$