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QUESTION ONE Mr. Sedero is planning to establish a small plant to produce 1 million cement blocks annually for five years. The setting up of
QUESTION ONE Mr. Sedero is planning to establish a small plant to produce 1 million cement blocks annually for five years. The setting up of the factory will cost GHC 80.000. In year 1 cach block will sell for GHC 0.85. The price will rise by 8% each year. During the first year cost of production per block will be GHC 0.55 and this cost will rise by 4% each year. The firm uses the straight line method of depreciation and the residual value is GHC 5,000. The required rate of return and the corporate tax rate are 15% and 30% respectively. i). Calculate the net present value of the project. ii). Determine the internal rate of return. 20marks
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