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VWX Corp. is considering a project that requires an initial outlay of Rs. 2,50,000 and is expected to generate the following profits: Year 1 2
VWX Corp. is considering a project that requires an initial outlay of Rs. 2,50,000 and is expected to generate the following profits:
Year | 1 | 2 | 3 | 4 | 5 |
Rs. | 50,000 | 75,000 | 80,000 | 90,000 | 1,00,000 |
The project will be depreciated on a straight-line basis over 5 years. The corporate tax rate is 35%.
Required:
- Compute the Payback Period.
- Calculate the Average Rate of Return (ARR).
- Determine the Net Present Value (NPV) at a discount rate of 10%.
- Find the Internal Rate of Return (IRR).
- Assess the project's feasibility based on NPV and IRR.
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