Goodbuy Plastics Goodbuy Plastics has under consideration the proposal of production of high-quality plastic glasses. The necessary equipment to manufacture the glasses would cost INR 1 lakh and would last 8 years. The tax relevant rate of depreciation is 20% on written down value. Goodbuy intends to exit this segment at the end of 5th year and will sell the equipment at book value. There is no other asset in this block. 3 4 The glasses can be sold at INR 4 each and their price will increase by 5% every year. The variable costs are estimated at INR 2 per glass and will increase at 3% every year. The manufacturer estimates it will sell about 75000 glasses in the first year and intends to increase the sales by 5000 glasses every year. Regardless of the level of production, the manufacturer will incur cash cost of INR 25,000 each year if the project is undertaken. The additional working capital required to commence production is INT 50000 and it will increase at the same rate of sales. The tax rate is 35 per cent. 5 Assuming a 20% cost of capital should the proposed equipment be purchased? Also estimate the payback period and internal rate of return for the project. 10 onca Em 11 12 13 14