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Q4 Kuliyapitiya Municipal Council (KMC) has established a solid waste composting plant in February, 2009. The plant is considering an expansion project for which three
Q4 Kuliyapitiya Municipal Council (KMC) has established a solid waste composting plant in February, 2009. The plant is considering an expansion project for which three solid waste collection trucks are to be purchased. The KMC has already received a bid and its details are as follows. Estimates additional income is LKR 5,000,000 per year. The trucks cost LKR 14,800,000. The useful life is 4 years. Estimates maintenance costs is LKR 400,000 per year. Estimated running cost is LKR. 350,000 per year. At the end of useful life, the scrap value of the trucks is LKR. 1,800,000. Required: Identify the Cash flow of each year. (10 Marks) ii. Calculate the project's Payback Period. If KMC needs to recover the investment within 3 years, should it accept the investment? Why? (04 Marks) 111. Calculate the project's Net Present Value (NPV) if the required rate of return is 9 percent. Is the project acceptable? Why? (06 Marks) iv. Identify the project's Internal Rate of Return (IRR). (08 Marks) (Total: 28 Marks)
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