Magnum Leasing is in the business of providing automobiles on lease to corporate clients. Magnum is considering a new model of ford car for which an enquiry has come. The cost of the vehicle is Rs 1.5 million. Its operating, maintenance, insurance and other costs are expected to be Rs 0.25 million in year 1; thereafter it will increase annually by 6%. The car is expected to have a useful life of 6 years and it will fetch a net salvage value of Rs 0.6 million after that. The depreciation rate for tax purposes will be 40% under the written down value method. Centaur's marginal tax rate is 35% and its cost of capital is 10%.

Q-1) What will be the operating and other costs at the end of 6th year?

Q-2)What will be the value of post-tax EAC?

Q-3)What will be the present value of cash flows at the end of the first year?

Q-4)What is the value of post tax cash flow in the beginning of project?

Q-5)What will be the net present value (discounting factor) at 10% in 3rd years?

Q-6)What will be the present value of post-tax cash flows associated with the ownership of car?

Q-7)what will be the depreciation at the end of 4th year?

Q-8)What is the value of tax shield on operating cost and depreciation at the end of second year?