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VWX Corporation is planning to invest Rs.3,00,000 in a new project. The project is expected to last for 5 years with no residual value. The

VWX Corporation is planning to invest Rs.3,00,000 in a new project. The project is expected to last for 5 years with no residual value. The expected annual cash flows after depreciation but before tax are:

  • Year 1: Rs. 90,000
  • Year 2: Rs. 1,00,000
  • Year 3: Rs. 80,000
  • Year 4: Rs. 70,000
  • Year 5: Rs. 60,000

The project will be depreciated at 20% annually, and the company's tax rate is 27%. Calculate the following:

  1. Payback Period (PBP).
  2. Accounting Rate of Return (ARR).
  3. Net Present Value (NPV) and Profitability Index (PI) with a cost of capital of 10%.
  4. Internal Rate of Return (IRR).

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