Zenith Electronics is considering an upgrade to its assembly line. The project details include:

• Cost of Upgrade: USD 500,000
• Expected Life: 10 years
• Salvage Value: USD 50,000
• Depreciation Method: Straight Line
• Cost of Capital: 15%

Expected cash flows:

Year	Cash Flow	Profit
1	80,000	10,000
2	90,000	15,000
3	100,000	20,000
4	110,000	25,000
5	120,000	30,000
6	130,000	35,000
7	140,000	40,000
8	150,000	45,000
9	160,000	50,000
10	170,000	55,000

Requirements:

a. What are the key factors that influence capital budgeting decisions? b. Compare the payback period method with the NPV method in terms of decision-making effectiveness. c. Using the information provided:

• Calculate the payback period.
• Determine the NPV.
• Calculate the Internal Rate of Return (IRR).
• Evaluate the profitability index.