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TLtd may acquire Vitd. T Ltd. estimates that V Ltd. will provide net income after taxes of 20 crores in the first year, 30 crores
TLtd may acquire Vitd. T Ltd. estimates that V Ltd. will provide net income after taxes of 20 crores in the first year, 30 crores in the second year, 40 Crore in the third year, 50 Crore in each of the years from fourth to sixth year and * 60 crore annually thereafter onwards. V Ltd. requires fresh capital investment of 7 50 crores at the end of first year and depreciation figure for first year will be * 30 crores. Similarly second year fresh capital investment will be 50 crore and depreciation will be * 40 crores. Third year onwards the fresh investment and depreciation will stabilize at * 40 crores each. The aggregate required rate of return is 15%, Judge the value of acquisition based on the above information. Strategic Financial
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