Formatting Clipboard Font Alignment Number Style B1 SECTION C(7x 2 = 14 Marks) E F G H M SECTION C (7 x 2 = 14 Marks) C-Q2 After spending Rs. 3 million on research, Sundaram fasteners has developed a new variety of fasteners. The company now intends to undertake commercialisation of the product. The project requires an initial investment of Rs. 6 million in plant and equipment. The plant and equipment will be depreciated on a straight line basis over five years to a value of zero. At the end of the project, the equipment can be sold for Rs. 500,000. The working capital for each year is estimated at 10% of the next year's projected sales. The production costs are estimated at Rs. 1.5 per stick and the stick will be sold for Rs. 4 each. There will be no other production expenses. The projected sales are given in the table below. The company pays tax at 35% and the required return from the project is 12%. Calculate IRR and NPV of the project. Should the company make investment in the project? Give reasons for you recommendatit. 3 4 Year Sales (Mn Units) 0 0 5,00,000 6,00,000 10,00,000 10,00,000 6,00,000 5 7 Instructions Sec A Sec B-Q1 Sec B-02 Sec B-03 Sec C-01 Sec C Q2 Secco Type here to search