Question
After conducting a survey for Reliance Infocomm and Services Ltd., it was decided to undertake a project for a new handset in the market. The
After conducting a survey for Reliance Infocomm and Services Ltd., it was decided to undertake a project for a new handset in the market. The company cut-off rate is 13% it was estimated that the project would have a life of 5 years. The project would cost Rs100,00,000 n Plant and Machinery in addition to working capital Rs. 25, 00,000. The scrap value of the machinery at the end of 5 years was estimated at Rs.15,00,000, after providing depreciation on straight-line basis. Profit after taxes was estimated as follows. Year Profits After Tax 12,50,000 25,00,000 15,00,000 2 3 4 3 Ascertain the NPV @ 12% of the project and recommend whether to accept the proposal.
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