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Hello, Pls help me in solveing the problem mentioned below:
Ram & Co is considering investment costing rs 450 lacs. This is financed by loan of Rs. 300 lacs on which interest @ 15 % is payable. The estimated useful life is 5 years. The project involves plant costiing Rs 200 lacs & working capital is Rs 250 lacs. The plant is subjected to be depreciated @ 15 % p a fixed installment method. At the end of project life, plant will realise 25% of cost & Working capital will realise 90% of cost. The loan will be repaid. The PBD& T is estimated & PV factor @ 10 % & 16% are as follows:
year PBDIT PV Factor
10% 16%
1 125 0.909 0.862
2 150 0.826 0.743
3 175 0.751 0.641
4 195 0.683 0.552
5 160 0.621 0.476
Income tax applicable @ 35 % You are required to calculate
1 Payback period
2 ARR on total investment
3 NPV @ 10 % & 16%
4 IRR
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