Question: (a) The Bright company is evaluating a project which will cost Rs 1,00,000 and will have no salvage value at the end of its

(a) The Bright company is evaluating a project which will cost Rs

(a) The Bright company is evaluating a project which will cost Rs 1,00,000 and will have no salvage value at the end of its 5-year life. The project will save costs of Rs. 40,000 a year. The company will finance the projec by a 14% loan and will repay loan in equal instalments of Rs. 20,000 year. If the firm's tax rate is 50% and the after tax cost of capital is 18% what is the NPV and IRR of the project?

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Given Data Initial Project Cost Rs 100000 Project Life 5 years Annual Cost Savings Rs 40000 Loan Interest Rate 14 Annual Loan Repayment Rs 20000 Firms Tax Rate 50 AfterTax Cost of Capital 18 Steps to ... View full answer

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