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A company is considering to install a machine costing Rs. 5,00,000 with an additional investment of Rs. 1,50,000 for its installation. The salvage value at
A company is considering to install a machine costing Rs. 5,00,000 with an additional investment of Rs. 1,50,000 for its installation. The salvage value at the end of year 10 is estimated at Rs. 2,50,000. The machine is estimated to generate a sales revenue of Rs. 20,00,000 in the first year and the sales are expected to grow at 5% p.a. for the remaining life of the machine. The profit after tax is expected at 10% of the sales while the working capital requirement are expected to be 5% of the sales. Compute the cash flows assuming SLM depreciation and additional working capital is required at the beginning of each year and is fully salvageable
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