Question: Delta Co. is looking into a project that requires an initial investment of Rs.1,50,000. The project will last for 5 years with no salvage value.

Delta Co. is looking into a project that requires an initial investment of Rs.1,50,000. The project will last for 5 years with no salvage value. The annual profits after depreciation but before tax are expected to be Rs. 40,000, Rs. 50,000, Rs. 60,000, Rs. 55,000, and Rs. 45,000. Depreciation is applied at 10% of the original cost, and the company pays 30% tax. Required:
1.Calculate the Payback Period (PBP) and ARR.
2.Determine the NPV and NPV Index at 8% cost of capital.
3.Calculate the IRR.
4.Evaluate the Profitability Index (PI).
5.Determine the DPBP.

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