Q.4 Firm purchased plant Rs. 150,000; foundation cost paid 10,000 and installation Rs. 20,000. Project is forecast for five years, details are as follows:

Sales 15000 units [growth of sales by 20%for first two years and then 10% for rest of the project life].

Working capital required at the start of project 10,000.

Sales price 25 per unit

Variable cost of sales Rs. 8 per unit

Fixed expenses Rs. 10,000(excluding depreciation)

Firm uses diminishing Balance Method [rate20%] and tax rate 40%. Assume that plant sold at the end of the project equal to its book value. Cost of capital 15%.

Calculate

NPV and IRR