You are recruited as an intern in the CAPEX team of an automobile company. To assess your skill sets and finance knowledge, you are given a task of analysingthe risk and return of a project on which the team is currently working. You are asked to estimate NPV of the project and do scenario analysis. You may take suitable assumptions to define optimistic and pessimistic scenarios and forecast the inputs for the same.

The project requires initial investment of Rs 10 million. The project has a useful life of 4 years and nil salvage value. The project is expected to generate revenue of Rs. 10 million per year and cash operating costs shall be Rs 6 million a year. To fund the project, company will take a loan which carries interest rate of 15%. Loan shall be repaid in five equal instalments . The company's tax rate is 30% and cost of capital is 13.50 %. Assume straight line method of depreciation for tax purpose.