C Ltd. is considering investing in a project. The expected original investment in the project will be Rs.2,00,000,
the life of project will be 5 years with no salvage value. The expected net cash inflows during the life of the
project will be as follows.
Year
1
2
3
4
5
Net Cash Flows 85,000 1,00,000 80,000 80.000 40,000
The company is subjected to 30% tax rate. Calculate the payback period, net present value and profitability
index, if cost of capital is 10%.
Answers
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