{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-05-25T05:04:29-04:00", "answer_date": "2024-05-25 05:04:29", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "1668643", "url": "\/study-help\/questions\/q2-the-project-manager-of-a-company-has-gathered-the-1668643", "question_creation_date_js": "2024-05-25T05:04:29-04:00", "question_creation_date": "May 25, 2024 05:04 AM", "meta_title": "[Solved] Q-2 The Project Manager of a company has | SolutionInn", "meta_description": "Answer of - Q-2 The Project Manager of a company has gathered the following information relating to setting up a new project for a | SolutionInn", "meta_keywords": "-2,project,manager,company,gathered,information,relating,setting,new,proposed,marks,product", "question_title_h1": " Q-2 The Project Manager of a company has gathered the following information relating to setting up a new project for a proposed new Marks", "question_title": " Q-2 The Project Manager of a company has gathered the following", "question_title_for_js_snippet": "Q 2 The Project Manager of a company has gathered the following information relating to setting up a new project for a proposed new Marks product after discussing it with concerned departments like marketing, technical, etc The project would have an economic life of 5 years It would generate revenue of Rs 50 million in Year 1, which will rise by Rs 10 million per year for the following two years Thereafter, the revenues will decline by Rs 10 million per year for the remaining two years Fixed Operating Costs (before depreciation, interest, and taxes) will be 5 million p a over the entire life Variable Operating Costs will be 40 percent of revenues The product is expected to erode the revenues of an existing product Due to this erosion, there will be a loss of contribution margin of Rs 6 million per year for 5 years The project will require an outlay of Rs 60 million in plant and machinery right in the beginning The net working capital requirement will be 20 percent of revenues Assume that the investment in net working capital will be made right in the beginning of each year The net salvage value of plant and machinery after 5 years is expected to be equal to its book value The working capital investments will be liquidated at book value at the end of the project For tax purposes, the 3 20 sa Smr MFB4CCEF04 depreciation rate will be 20 percent as per the written down value method The effective tax rate is 30 Required Calculate NPV if the after tax cost of capital relevant to the project is 12 Appendix 6 1 1 2", "question_description": "\"image\"image", "transcribed_text": "Q-2 The Project Manager of a company has gathered the following information relating to setting up a new project for a proposed new Marks product after discussing it with concerned departments like marketing,\" technical, etc. The project would have an economic life of 5 years. It would generate revenue of Rs.50 million in Year-1, which will rise by Rs. 10 million per year for the following two years. Thereafter, the revenues will decline by Rs.10 million per year for the remaining two years. Fixed Operating Costs (before depreciation, interest, and taxes) will be 5 million p.a. over the entire life. Variable Operating Costs will be 40 percent of revenues. The product is expected to erode the revenues of an existing product. Due to this erosion, there will be a loss of contribution margin of Rs.6 million per year for 5 years. The project will require an outlay of Rs.60 million in plant and machinery right in the beginning. The net working capital requirement will be 20 percent of revenues. Assume that the investment in net working capital will be made right in the beginning of each year. The net salvage value of plant and machinery after 5 years is expected to be equal to its book value. The working capital investments will be liquidated at book value at the end of the project. For tax purposes, the 3 20 sa Smr MFB4CCEF04 depreciation rate will be 20 percent as per the written down value method. The effective tax rate is 30%. Required: Calculate NPV if the after-tax cost of capital relevant to the project is 12%. Appendix: 6% 1 1 2", "related_book": { "title": "Managerial Accounting", "isbn": "B010IKDQZM", "edition": "10th Edition", "authors": "Carl S. Warren, James M. Reeve, Jonathan E. Duchac", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/125.jpg", "uri": "\/textbooks\/managerial-accounting-10th-edition-b010ikdqzm", "see_more_uri": "" }, "free_related_book": { "isbn": "B0868KH57T", "uri": "\/textbooks\/k-knodel-mouse-pad-waterproof-desk-mat-kl-b0868kh57t", "name": "K KNODEL Mouse Pad Waterproof Desk Mat", "edition": "" }, "question_posted": "2024-05-25 05:04:29", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/questions\/which-power-plant-has-high-load-factor-405794", "description": "Which power plant has high load factor?", "stars": 3 }, { "url": "\/compare-and-contrast-the-bar-chart-for-categorical-data-with", "description": "Compare and contrast the bar chart for categorical data with the histogram for numerical data.", "stars": 3 }, { "url": "\/study-help\/calculus-4th\/compute-the-stones-average-velocity-over-the-time-intervals-1-1144208", "description": "Compute the stones average velocity over the time intervals [1, 1.01], [1, 1.001], [1, 1.0001] and [0.99, 1], [0.999, 1], [0.9999, 1], and then estimate the instantaneous velocity at t = 1.", "stars": 3 }, { "url": "\/study-help\/biostatistics\/what-is-the-form-of-the-simplest-multiple-regression-model-1981351", "description": "What is the form of the simplest multiple regression model that might be used to explain a curvilinear relationship between a response variable ???? and an explanatory variable ?????", "stars": 3 }, { "url": "\/flint-hills-middle-school-wants-to-raise-money-for-a", "description": "Flint Hills Middle School wants to raise money for a new sound system for its auditorium. 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