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Amreli Steels Limited can invest Rs . 2 0 0 , 0 0 0 in a new plant. The plant has an expected life of

Amreli Steels Limited can invest Rs.200,000 in a new plant. The plant has an expected life of 5 years and expected sales are Rs.500,000 a year. Variable cost of sales is 60% and fixed costs are Rs.20,000 a year. Working Capital of Rs.10,000 will be invested at the start of the project. The plant will be depreciated straight line over 5 years to a salvage value of 50,000. The cost of capital is 10% and tax rate is 40%.a. Calculate initial cash outflow.b. Calculate Operating Cash Flow.c. Calculate Terminal Cash Flow.

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