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XYZ Pvt. Ltd. is planning a project with the following projected cash flows: Year Cash Flow (Rs.) 0 -3,00,000 1 60,000 2 70,000 3 80,000

XYZ Pvt. Ltd. is planning a project with the following projected cash flows:

Year

Cash Flow (Rs.)

0

-3,00,000

1

60,000

2

70,000

3

80,000

4

90,000

5

1,00,000

  • Depreciation: 20% on original cost
  • Tax rate: 30%

Required:

  1. Calculate Payback Period (PBP) and ARR.
  2. Determine NPV and NPV Index at a 8% cost of capital.
  3. Compute the IRR.
  4. Evaluate the profitability index.

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