Question 10 BCD Corporation is evaluating a new business venture with a project life of 6 years The initial cost of the project is 4 crores An additional 25 lakhs is needed for working capital, recoverable at the end of the project The project is expected to generate annual revenues as follows Year 1 1 crore Year 2 1 5 crores Year 3 2 crores Year 4 2 2 crores Year 5 2 5 crores Year 6 2 8 crores Operating costs, excluding depreciation, are 50 of revenues The equipment's salvage value at the end of the project is 30 lakhs The tax rate is 25 , and the company's discount rate is 11 Requirements Estimate the project's annual net cash flows Calculate the project's Net Present Value (NPV) Determine the project's Internal Rate of Return (IRR) Compute the Payback Period Conduct a scenario analysis with a 10 increase in operating costs FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscriptFont Family Arial Georgia Impact Tahoma Times New Roman Verdana Font Size 8 9 10 11 12 14 18 24 30 36 48 60 72 96 Inline Style Big Red Small Blue Paragraph Style Gray Bordered Spaced Uppercase Paragraph Format Normal Heading 1 Heading 2 Heading 3 Heading 4 Code Align Align Left Align Center Align Right Align Justify Ordered ListUnordered ListDecrease IndentIncrease IndentInsert ImageInsert TableSpecial CharactersInsert Horizontal LineSelect AllClear FormattingUndoRedo Clear Formatting Selected Clear FormattingUnlicensed copy of the Froala Editor Use it legally by purchasing a license Type something Analyze the following financial statement information and answer the questions below Item Value ($ millions) Cash 50 Accounts Receivable 75 Inventories 120 Total Current Assets 245 Total Assets 700 Accounts Payable 60 Short Term Debt 40 Long Term Debt 200 Total Liabilities 300 Equity 400 a Calculate the current ratio b Determine the debt to equity ratio c What is the total debt to total assets ratio d If the company wants to increase its current ratio to 2 0, by how much should it increase its cash holdings

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Question 10: BCD Corporation is evaluating a new business venture with a project life of 6 years. The initial cost of the project is 4

Question 10:

BCD Corporation is evaluating a new business venture with a project life of 6 years. The initial cost of the project is ₹4 crores. An additional ₹25 lakhs is needed for working capital, recoverable at the end of the project. The project is expected to generate annual revenues as follows:

Year 1: ₹1 crore
Year 2: ₹1.5 crores
Year 3: ₹2 crores
Year 4: ₹2.2 crores
Year 5: ₹2.5 crores
Year 6: ₹2.8 crores

Operating costs, excluding depreciation, are 50% of revenues. The equipment's salvage value at the end of the project is ₹30 lakhs. The tax rate is 25%, and the company's discount rate is 11%.

Requirements:

Estimate the project's annual net cash flows.
Calculate the project's Net Present Value (NPV).
Determine the project's Internal Rate of Return (IRR).
Compute the Payback Period.
Conduct a scenario analysis with a 10% increase in operating costs.

FullscreenBoldItalicUnderlineStrikethroughSubscriptSuperscriptFont FamilyFont SizeInline StyleParagraph StyleParagraph FormatAlignOrdered ListUnordered ListDecrease IndentIncrease IndentInsert ImageInsert TableΩSpecial CharactersInsert Horizontal LineSelect AllClear FormattingUndoRedo????????Clear Formatting????Selected Clear FormattingUnlicensed copy of the Froala Editor. Use it legally by purchasing a license.

Type something

Analyze the following financial statement information and answer the questions below:

Item	Value ($ millions)
Cash	50
Accounts Receivable	75
Inventories	120
Total Current Assets	245
Total Assets	700
Accounts Payable	60
Short-Term Debt	40
Long-Term Debt	200
Total Liabilities	300
Equity	400

a. Calculate the current ratio. b. Determine the debt to equity ratio. c. What is the total debt to total assets ratio? d. If the company wants to increase its current ratio to 2.0, by how much should it increase its cash holdings?