1. Project A:

1. The proposal of setting up companys own manufacturing plant involves initial investments as:
   1. Buying a newly built factory building: $ 17.5 mn.
   2. Purchase of Machinery: $125 Million

Total Starting Investment: $142.5 Million

2. The newly set up factory will take some time in reaching its full production capacity. The Market analyst forecasted the production volume as follows:

Year	1	2	3	4	5
Expected Production (units)	5	10	25	30	35
Expected Sales Revenue ($Million)	50	100	250	300	350

3. Cash Flows: The company is likely to bear fixed operation and maintenance expenses of Rs. 5 Million Per annum. The production cost for company is $3 per unit while the price of each unit is $10. The Company is subjected to 35% tax on earnings and a straight line method of depreciation.

Particulars	Year 1	Year 2	Year 3	Year 4	Year 5
Sales Revenue	50	100	250	300	350
Less Fixed Cost	5	5	5	5	5
Less Variable cost	15	30	75	75	87.5
Less depreciation(0.20)	25	25	25	25	25
EBIT	5	40	145	195	232.5
Less Taxes(35%)	1.75	14	50.75	68.25	81.375
EAT	3.25	26	94.25	126.75	151.125
Add depreciation	25	25	25	25	25
CFAT	28.25	51	119.25	151.75	176.125

* All values in $Millions

4. Total Investment = Initial Investment + Operating Expenses = 142.5 + 25+282.5 = $450mn Total Earnings after taxes EAT = $401.4 Million

Total Cash Flows after Taxes = $523.4 Million