Ajeet Corporation is considering the risk $1$ point characteristics of a certain project. The firm has identified that the following factors, with their respective expected values, have a bearing the NPV of this project.

Initial

investment

Rs$.$

$30,000$

Cost of

capital

$10\%$

Quantity manufactured and sold annually $1,400$

Price per unit

Rs$.30$

Variable cost per

unit

Rs$.20$

Fixed

costs

Rs$.$

$3,000$

Depreciation

$2,000$

Tax

rate

$50\%$

Life of the

project

$5$ years

Net salvage

value

Rs$.$ Nil

Assume that the following underlying variables can take the values as shown below:

underlying

variable

Pessimistic

Quantity manufactured and sold

$800$

$1800$

Price per unit

Rs$.$

$20$

Rs$.50$

Variable cost per unit

Rs$.$

$40$

Rs$.15.$

calculate pessimistic net present value.

ans a$)$rs$-16732$

b$)16732$

c$)5360$

d$)2222$

calculate finanacial break even point.

ans a$)$rs $15000$

b$)31895\mathrm{.}5$

c$)50548$

d$)54005$

calculate accounting break even point.

ans a$)$ rs $15000$

b$)$rs $31895\mathrm{.}5$

c$)50548$

d$)54005$