A plastic glass manufacturer is considering the proposal to produce high quality plastic glasses. The required equipment to manufacture the glasses would cost Rs. l,000,000 and would last 5 years. The tax relevant rate of depreciation is 25% on written down value. The expected salvage value of this equipment is Rs. 100,000. The glasses can be sold at Rs. 40 each. Regardless of the level of production, the manufacturer will incur fixed cost of Rs. 250,000 each year if the project is undertaken. The variable costs are estimated at Rs. 20 per glass. The manufacturer estimates it will sell about 750,000 glasses per year; the tax rate of 35%. Should the proposed equipment be purchased? Assume 20 per cent cost of capital and additional working capital requirement of Rs. 500,000.