XYZ Ltd. plans to introduce a new product line, requiring an investment of Rs. 800 lakhs. The expected earnings before depreciation and taxes for the next seven years are as follows:

Year	1	2	3	4	5	6	7
Earnings (Rs.in lakhs)	300	310	320	330	340	350	360

• The cost of capital is 9%.
• Depreciation is to be applied at 20% on a Written Down Value basis.
• No residual value at the end of the project.
• No taxes applicable.

Requirements:

• Determine the annual depreciation expense.
• Calculate the NPV of the project.
• Find the IRR of the project.
• Advise the company on whether to proceed with the investment based on NPV and IRR.