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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:

  1. Calculate the Payback Period.
  2. Determine the Accounting Rate of Return (ARR).
  3. Compute the Net Present Value (NPV) at a discount rate of 8%.
  4. Find the Internal Rate of Return (IRR).
  5. Evaluate the project’s viability based on financial metrics.

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