A company is considering an investment proposal to install new milling machine. The project will cost Rs.50,000.
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Question:
A company is considering an investment proposal to install new milling machine. The project will cost Rs.50,000. The facility has a life expectancy of 5 years and no salvage value. The company tax rate is 40%. Firm uses straight-line method for depreciation. The estimated earnings before tax from the proposed investment plan are as under.
Year Earning before tax
- Rs. 22,000
- 18,000
- 14,000
- 15,000
- 25,000
Compute cash flow for 5 years.
Calculate:
- Payback period
- Profitability Index
- IRR
- NPV( discount rate is 15%)
- Discounted Payback
- MIRR
Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
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