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DEF Ltd is considering two mutually exclusive investments. The company's cost of capital is 11% and the tax rate is 29%. Details are provided below:
Particulars | Investment I | Investment J |
Cost of investment | 22,00,000 | 25,00,000 |
Expected life | 6 years | 6 years |
Annual Income (before Tax & Depreciation) | 6,75,000 | 8,00,000 |
Depreciation is charged on a straight-line basis. You are required to calculate: a. Discounted payback period b. NPV c. Profitability index
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