waste guzzler. This gadget is an outcome of four years of hard work of your R&D department at a cost of Rs. 400 crore. The gadget can treat any waste solid/liquid produced daily by a city with a population of 20 lac residents. The project requires a initial capital investment of Rs. 800 which can be depreciated at 25% WDV The life of the project is five years and the revenues, costs and planned capex is as follows: 1 2 3 4 5 120 421 589 896 1274 Revenue Cost of Goods Sold (other than depreciation) Other costs Capex 72 35 250 253 52 300 354 74 200 538 98 150 765 152 100 The project needs working capital of Rs. 200 initially. Subsequently, the working capital requirement shall be to the extent of 20% of the revenues. Implementing this project shall release the requirement of 50 square acres of land which is currently used as a dumping ground. The company plans to develop a Infopark on this land which could be leased to earn Rs. 100 crore annually. Given that the company expects a rate of return of 16%, evaluate the viability of this project following NPV and MIRR. The company is liable to pay 30% taxes. (5) Hind: Remember the following fundamentals - each capex would affect the estimated depreciation for the subsequent year. - you can carry forward your losses (if any) -Principles of incremental cash flows

Que. 3. You are working for the Indian waste management company. The company has researched and devel oped a gadget calle waste guzler. This gadget is an outcome of four years of hard work of your R\&D department at a cost of Rs. 400 crore. The gadget can treat any waste solid/liquid produced daily by a city with a population of 20 la residents. The project requires a initial capital investment of Rs. 800 which can be depreciated at 25% WDV. The life of the project is five years and the revenues, costs and planned capex is as follows. The project needs working capital of Rs. 200 initially. Subsequently, the working capital requirement shall be to the extent of 20% of the revenues. Implementing this project shall release the requirement of 50 square acres of land which is currently used as a dumping ground. The company plans to develop a Infopark on this land which could be leased to earn Rs. 100 crore annually. Given that the company expects a rate of return of 16%, evaluate the viability of this project following NPV and MIRR. The company is liable to pay 30% taxes. (5) Hint: Remember the following fiondamentals - each capex would affect the estimated depreciation for the subsequent year: - you can carry forward your losses (if any) -Principles of incremental cash flows