Question 4:

JKL Corp is planning a project with a life of 4 years. The initial outlay for the project is ₹2 crores. It is estimated that the project will require an additional ₹25 lakhs for marketing in year 1 and ₹30 lakhs for maintenance in year 3. The estimated revenue from the project over the four years is as follows:

• Year 1: ₹1 crore
• Year 2: ₹1.5 crores
• Year 3: ₹2 crores
• Year 4: ₹1.8 crores

The operating costs are 50% of the revenue. The equipment will have a salvage value of ₹20 lakhs at the end of the project. The tax rate is 25%, and the discount rate is 10%.

Requirements:

1. Calculate the net cash inflows for each year.
2. Determine the project's Net Present Value (NPV).
3. Compute the project's Payback Period.
4. Assess the project's Internal Rate of Return (IRR).
5. Conduct a scenario analysis with a 10% decrease in revenue each year.