Question

A project requires an initial investment of Rs.5, 00,000. It is estimated to have a life of 6 years. The estimated net cash flows are as under: Year Net Cash Flow (Rs.) 1 60,000 2 80,000 3 1, 10,000 4 1, 20,000 5 1, 30,000 6 1, 00,000 Cost of capital is 10%. Calculate: a. Payback Period b. Net Present Value c. IRR of the project. Assume that the standard payback period is 4 years. Should the project be accepted as per each of the above measures? Why? [Discount factors at 10% are 0.909, 0.826, 0.751, 0.683, 0.621, 0.564 for 1 to 6 years.]

Answer 1

Answer:

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