Your company considers a new investment project, which would last for three years.The project involves the purchase of a new machine, which costs Rs $12,00,000.$There is no other upfront cost. This initial investment can be depreciated over the next three years according to a straight$-$line depreciation rule. The machine has nosalvage value at the end. Sales is projected to be Rs $8,00,000$ per year. Operating

costs $($primarily for raw materials$)$ are Rs $2,00,000$ per year. The corporate tax rate is $25\%$ and the risk$-$adjusted discount rate is $15\%.$

$($a$)$ What is the project net profit every year of the next $3$ years?

$($b$)$ What is the projected cash flows every year of the next $3$ years?

$($c$)$ Compute the NPV of the project. Suppose that the company needs to purchase all the required inventory of raw materials of three years upfront instead of $\text{'}$as and when needed'. This will require an upfront payment of Rs $6,00,000$ in inventory, which will then be depleted, by equal amount every year in the next three years. How would your answers change to the following questions?

$($d$)$ What is the project net profit every year of the next $3$ years?

$($e$)$ What is the projected cash flows every year of the next $3$ years?