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YZA Ltd. is considering an investment in a project requiring an initial investment of Rs. 6,50,000. The project is expected to generate the following profits:
YZA Ltd. is considering an investment in a project requiring an initial investment of Rs. 6,50,000. The project is expected to generate the following profits:
Year | 1 | 2 | 3 | 4 | 5 |
Rs. | 1,20,000 | 1,40,000 | 1,60,000 | 1,80,000 | 2,00,000 |
The project will be depreciated on a straight-line basis over 5 years. The tax rate is 30%.
Required:
- Calculate the Payback Period.
- Determine the Accounting Rate of Return (ARR).
- Compute the Net Present Value (NPV) at a discount rate of 8%.
- Find the Internal Rate of Return (IRR).
- Evaluate the project’s viability based on financial metrics.
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