Question: A company is evaluating a project that requires an initial investment of 800 lakhs and is expected to generate the following cash inflows: Year Cash

A company is evaluating a project that requires an initial investment of ₹800 lakhs and is expected to generate the following cash inflows:

Year

Cash Flow (₹ in lakhs)

1

180

2

200

3

220

4

240

5

260

6

280

The project has a discount rate of 18%. Depreciation is applied on a straight-line basis over the project's life, and the salvage value is ₹50 lakhs.

Required:

  1. Calculate the NPV of the project.
  2. Determine the IRR.
  3. Compute the Payback Period.
  4. Assess the impact of a 10% decrease in initial investment on the project's NPV and IRR.

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