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?
More Capital Budgeting Questions
- Project X requires an initial investment of ₹10,00,000 and is expected to generate cash inflows of ₹3,00,000, ₹4,00,000, ₹5,00,000, and ₹2,00,000 over the ...
- All of the following are capital receipts, except ________
- A service shall be a continuous supply of service agreed to he provided continuously or on recurrent basis under a contract when the period of service exce...
- The discount rate that makes the NPV of a project equal to zero is called the:
- The cost of capital is used as a discount rate in:
- Project X has an initial outflow of ₹6,00,000 and is expected to generate cash inflows of ₹2,50,000, ₹3,00,000, and ₹2,00,000 over the next 3 years. If the...
- When evaluating mutually exclusive projects with unequal investment scales under capital rationing, which evaluation criterion provides the most reliable r...
- A project requires an initial investment of ₹10,00,000 and is expected to generate cash inflows of ₹4,00,000 per annum for 3 years. The Payback Period (in ...
- According to IND AS 115, when can revenue be recognized?
- ABC Ltd. is evaluating a project requiring an initial investment of ₹50 lakhs. The project is expected to generate cash flows of ₹15 lakhs per year for the...
Hey! Ask a query
Please enter email id
The email must be a valid email address.
Please enter Mobile Number
Please enter valid Mobile Number
Please enter your Doubt
Think You're Ready for RBI Grade B?
RBI Grade B 2026 Phase 1 Memory Based Paper
- 200 Questions with Detailed Solutions
- Section-wise Coverage (GA, English, Quant & Reasoning)