STU Ltd. is evaluating a project that requires an initial investment of Rs. 4,00,000. The project life is 4 years with no residual value. The expected profits after depreciation but before tax are:

• Year 1: Rs. 1,00,000
• Year 2: Rs. 1,20,000
• Year 3: Rs. 1,40,000
• Year 4: Rs. 1,60,000

Depreciation is charged at 25% on the straight-line method. The tax rate is 29%.

Required:

1. Calculate the Payback Period.
2. Determine the Accounting Rate of Return (ARR).
3. Compute the Net Present Value (NPV) using a discount rate of 9%.
4. Calculate the Internal Rate of Return (IRR).
5. Decide whether to proceed with the project based on financial metrics.