Q.-02 A company is considering an investment proposal to install new milling machine. The project will cost Rs.50,000. The facility has a life expectancy of 5 years and no salvage value. The company tax rate is 40%. Firm uses straight-line method for depreciation. The estimated earning before tax from the proposed investment plan are as under. Year Earning before tax 1 Rs. 22,000 2 18,000 3 14,000 4 15,000 5 25,000
Compute cash flow for 5 years. Calculate: 1. Payback period 2. Profitability Index 3. IRR 4. NPV( discount rate is 15%)
