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An asset is purchased for Rs. 2,200,000 Rs. 100,000 is paid for several duties. The cost to bring the asset into the condition necessary to
An asset is purchased for Rs. 2,200,000 Rs. 100,000 is paid for several duties. The cost to bring the asset into the condition necessary to make it capable of operating is Rs. 200,000. It is probable that The useful life of the asset will be 6 years. The tax department allowed the depreciation of the asset in first 4 years of operation. The old asset may be sold for Rs. 400,000 at a loss of Rs. 50,000. There will also an increase in working capital for Rs. 200,000. It will be resulted an increase in operating profit of Rs. 600,000 without subtracting depreciation. At the end of the life of the project the asset may be sold for Rs. 300,000 and the working capital will also be released. What will be the cash flow at the start and during the life of the asset, make separate calculations for the last year of the project. The tax rate is 40%
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