Question
Raman Ltd. is evaluating a new machine costing ₹60
lakhs with a useful life of 5 years. The expected annual operating cash inflows (after-tax) are ₹18 lakhs. The machine will be depreciated straight-line to zero but will have a salvage value of ₹10 lakhs at the end of 5 years. The company’s tax rate is 30%, and the cost of capital is 12%. The present value factors (12%) for 5 years are: Year 1: 0.893, Year 2: 0.797, Year 3: 0.712, Year 4: 0.636, Year 5: 0.567 PV of ₹1 after 5 years = 0.567 Cumulative PV factor = 3.605 What is the NPV of the project?Solution
Annual inflows = ₹18L for 5 years PV of inflows = 18 × 3.605 = ₹64.89L Tax on salvage = ₹10L × 30% = ₹3L → Net Salvage = ₹7L PV of Salvage = 7 × 0.567 = ₹3.969L Total PV = 64.89 + 3.969 = ₹68.86L NPV = 68.86 – 60 = ₹8.86L
More Capital Budgeting Questions
√3598 × √(230 ) ÷ √102= ?
10 * 15 + 30% of 150 + 80% of 200 = ?
(√2704 x 55)/(245 + 120) =?
4261 + 8234 + 2913 + 8217 + 6283 + 4172 =?
Solve.
15.73 +13.25 +16.73 – 28.71 = 5 ×?
180 ÷ 3 of 2 = 102 – ?
What will come in the place of question mark (?) in the given expression?
(11/45) of 225 + 3 X 75 = ? X (72 ÷ 6 + 4)
2856 ÷ 34 = ?% of 240
60% of 120 – ?% of 64 = 20% of 200
5121.3 × 641.8 ÷ 80.5 = 8?
