Study the case given below and answer the questions given at the end.

Dove Ltd propose to set up new plant at Thane for processing industrial waste into

marketable product. Product has demand for 60,000 units.

Processing cist includes variable cost Rs. 9 per unit and fixed cost (Excluding depreciation)

Rs. 50,000 p.a. Advertisement expenses are expected to be Rs. 24,000 p.a.

Product can be sold at Rs. 30 per unit. Raw material (input) is available at Rs. 3 per unit.

Capital investment is Rs. 24,00,000. Company has applied to Bank of Baroda for loan of

Rs. 18,00,000 for a term of 6 years which is life of assets. Loan is repayable in 6 equal

instalments along with interest at end of each year.

Rate of interest 10% p.a.

Income tax rate is 30%.

Questions:

A. Give Income statement for first 5 years only. Calculate debt service coverage ratio

for above 5 years.

B. Amortization schedule for payment loan. How do you measure product demand?