JKL Ltd is planning to undertake a project requiring an investment of $200,000. The project...
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Accounting
JKL Ltd is planning to undertake a project requiring an investment of $200,000. The project is expected to generate profits before depreciation and tax of:
Year | Profit (Rs.) |
1 | 60,000 |
2 | 70,000 |
3 | 80,000 |
4 | 90,000 |
5 | 50,000 |
Depreciation is to be provided at 20% per annum on the straight-line basis, and the tax rate is 25%. Required:
- Compute the Payback Period and ARR
- Determine NPV and PI, assuming the cost of capital is 11%
- Calculate the IRR
- Perform a break-even analysis for the project
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