Alpha Ltd is contemplating an investment in a new piece of machinery. Based on the

details given below calculate the cash flows and perform the capital budgeting analysis.

Would you go ahead with the investment?

Initial Investment Cost: Rs$\mathrm{.}100,000$

Useful Life of Machinery: $5$ years

Annual Revenue: Rs$.40,000$

Annual Operating Costs: Rs$.10,000$

Annual Depreciation $($Straight$-$line method$)$: Rs$.20,000$

Tax Rate: $30\%$

Discount Rate: $10\%$