Bharat Enterprises Ltd.

is considering a project for expansion of its manufacturing facilities involving an

outflow of Rs10000
It expects to sell 1000 units at a price of Rs15 every year. The variable cost per unit is Rs6.75 and fixed
cost is Rs4000.
Depreciation is charged by the firm 25% per annum on written down value method.
The active life of this project is 7 years with no salvage value and the company is subject to income tax
@35%
Determine company's cash flows.
If expected rate of return from this project is 12% p.a. find out:
1. Payback period 
2. Accounting rate of return 
3. Net Present Value 
4. Internal Rate of Return 
5. Discounted Payback Period 
6. Profitability Index 
7. If reinvestment rate of return on this project of the co. is 10% what is Modified Internal Rate of
Return.