ABC Ltd. plans to invest - 16,00,000 in a new unit. The project is expected to have a useful life of 4 years, with no salvage value at the end of…

ABC Ltd. plans to invest - 16,00,000 in a new unit. The project is expected to have a useful life of 4 years, with no salvage value at the end of its life. The annual depreciation charge for the project is 400,000. Projected revenues and costs for the project, ignoring inflation, are provided as follows: Year Revenues (₹) Costs (₹) 1 12,00,000 6,00,000 2 14,00,000 8,00,000 3 16,00,000 8,00,000 4 16,00,000 8,00,000 ABC Ltd. is subject to a corporate tax rate of 60%, and the cost of capital for the project, including inflation premium, is 10%. Depreciation provides a tax benefit, and inflation rates for revenues and costs over the project's lifespan are as follows: Year Revenue Inflation Cost Inflation 1 10% 12% 2 9% 10% 3 8% 9% 4 7% 8%