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Assignment No.1 Marks: 10
Due Date: November 23, 2015
ABC Limited is a company that deals in manufacturing chemical. There is an opportunity to
manufacture a new chemical for a Textile Industry. For this, the company must install a plant with
estimated life of 5 years, costing Rs.2.5 million.
For technical aspect of the project, a consultant would be hired at a cost of Rs.60,000. However, if
the project does not turn out financially feasible, his contract would be cancelled by paying him
Rs.20,000. At the end of first year, other acquisition cost would be Rs.40,000.
Working capital requirement in the beginning would be Rs.350,000 and Rs.100,000 in the next year.
All the working capital would be recovered at the end of fifth year. Due to technological
obsolescence the plant will not be useable after fifth year and the salvage value is estimated around
Rs.150,000.
Cash flow emerging from the additional sales would be Rs.650,000 in first year, Rs.600,000 in
second year, Rs.550,000 in third year, Rs.750,000 in fourth and last year.
The company shall depreciate the asset on straight line over its useful life. Tax rate is 20%. Company
requires 10% rate of return on such projects.
Following are some assumptions:
1. Taxes are paid in the same year of benefit occurring.
2. Consultant and Other costs are supposed to occur at the end of first year.
3. Inflation is assumed at 0%
Requirement:
You are required to evaluate the project on the basis of Net Present Value (NPV) whether it would
undertake or not.
Note: Provide all calculations, they carry marks.
24 hours extra / grace period after the due date are usually available to overcome uploading
difficulties. This extra time should only be used to meet the emergencies and above mentioned due
dates should always be treated as final to avoid any inconvenience.
· You can use any other source or book (other than recommended books) in order to clear
any concept.
· Don’t post any direct question related to assignment on MDB as it will not be replied. Only
concept related queries will be entertained.
DEADLINE:
· Make sure to upload the solution file before the due date on VULMS.
· Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
· Use the font style “Times New Roman” or “Arial” and font size “12”.
· It is advised to compose your document in MS-Word format.
· You may also compose your assignment in Open Office format.
· Use black and blue font colors only.
REFERENCING GuIDELINES:
· Use APA style for referencing and citation. For guidance search “APA reference style” in
Google and read various website containing information for better understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
· It is submitted after the due date.
· The file you uploaded does not open or is corrupt.
· It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
· It is cheated or copied from other students, internet, books, journals etc.

Views: 3933

Replies to This Discussion

npv kesy ha less then zero koi mjhy is ka bataye ga u guys are saying k npv 229728.20 ha to ye negative kesy hua ?

Last wale column me jb PV ka total krte hen tu negtive ata hai. aur humne kaha npv (229728.2) hai - brackets ka mtlb -ve hota hai. excel me jahan brackets hen uska mtlb b -ve hai

ye 229728.2 ni hy Zahra, ye (229728.2) hy .. jo amount brackets melikhi hoti hy wo actually minus me hoti hy, lekin minus ka sign book of accounts me nahi mention kerty.. uskijga brackets daal dety hy ..

year 0 me (2850,000) actually minus ka 2850,000 hy .. right .. i hope u understood .. 

OK THANKU SOOOOOOO MUCH MAHAM AND SULEMAN SORRY TENSION ITNI THI ASSIGNMENT KI MIND CONFUSE HOGYA BUT SO NICE OF UR SUPPORT 

its perfectly fine to get tensed ... kal me amounts he ghalat likh ke solve keri ja ra hy tha  

u r welcome zahra. ye discussion hai he confusion dur krne klye

maham ap ny ye jo solv assignment di ha..kya ye correct ha???

i'm sorry mene msg late dekha. i'm not 100% sure about it but when sulaiman confirmed that his answer was same  i was 90% sure its correct. i had a doubt abt consultation fee and acquisition cost & i asked sir about them but i didn't get any reply. so i didn't include them as per slide # 18 lec 9 and I have uploaded my assignment already so lets c what happens. hope for the best!

Maham  thanks for sharing 

i'm sorry sir tariq for uploading the solution this way but it was the last day of submission and there was alot of confusion, though i'm still not sure its 100% correct. students should not copy it as it is, they should understand as to how it is done. they still have to write alot of formulas in it and interpret the results, not just this calculation. hope i didn't break any rules...

Hi Maham! kindly plz guide me how u find out the values of discount factor. plz tell complete process to find discount factor. thnx

Take Ideas from each other and solve yourself.......Assignments are not for getting solutions only....they are NITRO for your study to boost up your thinking capabilities....If you present a self made Solution ....even if it is wrong....u will get some marks for attempt.....

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