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

Ajeet Corporation is considering the risk 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 Rs.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 Optimistic
Quantity manufactured and sold 8001800
Price per unit Rs.20 Rs.50
Variable cost per unit Rs.40 Rs.15.
calcultae optimistic and pessimitic npv.
also calculate accounting and financial break even point.

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