Question
Zeta Corporation is evaluating a project requiring an initial investment of Rs.3,00,000. The project has a 6-year life with no residual value. Expected profits after
Zeta Corporation is evaluating a project requiring an initial investment of Rs.3,00,000. The project has a 6-year life with no residual value. Expected profits after depreciation but before tax are Rs. 1,20,000, Rs. 1,50,000, Rs. 1,00,000, Rs. 1,20,000, Rs. 90,000, and Rs. 80,000 for each year. The project will be depreciated at 25% on the original cost, and the company has a tax rate of 35%. Calculate the following:
- Payback Period (PBP) and Accounting Rate of Return (ARR).
- Net Present Value (NPV) and NPV Index if the cost of capital is 12%.
- Internal Rate of Return (IRR).
- Profitability Index (PI).
- Discounted Payback Period (DPBP).
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
