1. ABC (Pvt.) Ltd. is planning to commence a new project for which they need new machinery. The machinery will be imported and has a cost of Rs. 18 Million. It will need an additional technical consultancy fee of Rs. 500,000/- for commencing operations after the installation. The project will end at the end of the fifth year. The machines will have a life of 5 years and, will be depreciated on straight line basis at 15% per annum to, Rs. 4 million, the salvage value at the end of the fifth year. It will result in sales revenue of Rs. 8.5 million and cash operating costs of Rs. 4.5 million for the first year. Both revenue and operating cost are estimated to be annually increased by 10% (based on the previous year values). Use of the machine will require an increase in working capital of Rs.5 million. ABC (Pvt) Ltd. expects at least 8% return on their investments. (i) If the management of ABC (Pvt.) Ltd. is expecting to recover their investment within 4 years, do you recommend this project? Show relevant calculations. (05 marks) (04 marks) (ii) Calculate annual Net Cash Flows of the project. (05 marks) (iii) Evaluate the project based on its Net Present Value (NPV). (iv) Comment on the feasibility of the project as per the Internal Rate of Return (IRR) of the project. (06 marks) (v) Express your opinion on the profitability of the project by calculating the followings; a. Accounting Rate of Return (ARR) b. Net Benefit Investment Ratio (NBIR) (10 marks) (vi) Based on the calculations made above, express your overall opinion on the acceptability of this project to ABC (Pvt.) Ltd. Are the above calculations sufficient to express your opinion? Explain. (05 marks) (vi) What will be the risk of making the investment decision when you consider only NPV and IRR in appraising this project? Discuss. (05 marks) Total 10 ml