21 The Management of a multinational company TL Ltd. is engaged in construction of Infrastructure Project. A proposal to construct a Toll Road in Nepal is under consideration of the Management. The following information is available: The initial investment will be in purchase of equipment costing USD 250 lakhs. The economic life of the equipment is 10 years. The depreciation on the equipment will be charged on straight line method. EBIDTA to be collected from the Toll Road is projected to be USD 33 lakhs per annum for a period of 20 years. To encourage investment Nepalese government is offering a 15 year term loan of USD 150 lakhs at an interest rate of 6 per cent per annum. The interest is to be paid annually. The loan will be repaid at the end of 15 year in one tranche. The required rate of return for the project under all equity financing is 12 per cent per annum. Post tax cost of debt is 5.6 per cent per annum. Corporate Tax Rate is 30 per cent. All cash Flows will be in USD. Ignore inflation. You are required to advise the management on the viability of the proposal by using Adjusted Net Present Value method. Given PVIFA (12%, 10) = 5.650, PVIFA (12%, 20) = 7.469, PVIFA (8%, 15) = 8.559, PVIF (8%, 15) = 0.315