9. A machine costing `12,00,000 is required to undertake a proposed project. The effective life of the
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9. A machine costing `12,00,000 is required to undertake a proposed project. The effective life of the machine is expected to be 5 years with residual value of `2,00,000. The company follows SLM of charging depreciation. The estimated EBT of the project are as follows:
Year 1 2 3 4 5 EBT (`) 4,80,000 5,60,000 6,40,000 4,00,000 32,000 If tax rate is 40% and cost of capital is 15%, calculate the NPV and suggest whether the machine should be acquired or not.
Given the PV of `1 at 15% discount rate:
Year 1 2 3 4 5 PVIF 0.8696 0.7561 0.6575 0.5718 0.4972
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Related Book For
Financial Management
ISBN: 9789352605606
1st Edition
Authors: Swapan Sarkar, Bappaditya Biswas, Samyabrata Das, Ashish Kumar Sana
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