Akash Ltd. is considering investment in a new project with equipment of Rs.10,00,000. The project will...
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Akash Ltd. is considering investment in a new project with equipment of Rs.10,00,000. The project will provide before-tax cash flows of Rs.6,00,000 per year for five years. The project will be totally financed through a 5 year loan with interest at 15% and annual repayments. The straight line method of depreciation over 5 years will be followed. The company has a tax rate of 40%. Calculate net cash flows per year and the NPV at a discount rate of 15% (5 marks) Akash Ltd. is considering investment in a new project with equipment of Rs.10,00,000. The project will provide before-tax cash flows of Rs.6,00,000 per year for five years. The project will be totally financed through a 5 year loan with interest at 15% and annual repayments. The straight line method of depreciation over 5 years will be followed. The company has a tax rate of 40%. Calculate net cash flows per year and the NPV at a discount rate of 15% (5 marks)
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Answer rating: 100% (QA)
The NPV of the project is positive This means that the pr... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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