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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
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%
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.
· 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.
· 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.
· 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
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.

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Replies to This Discussion

what is APA reference style please guide me?

is it right or not ?


ye kaya kaya likh dia howa ha app n .250000 capital konsa likh dia ha first year mein aur depreciation b galat nikali ha ap ka

Iss discussion kostart sy dekho... Maham ny iss discussion me solution b post kia hy .. usko b dekho, kisi b type ki koi confusion ho wo b is discussion me discuss ki hui hy ... ok just go through this whole discussion and your task will be completed ..

Hope u'll find what your are looking for.

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


u can watch this for help. SKIP 1:26 min.

wherever u have taken something from the internet just insert citaion at the end of that sentence or paragraph. zaruri ni wo words jo apne likhay wo as it is net se copy kiye hun apne. agr apne apne words me b kahen se dekh kr likha hai tu aise reference dalden (insert citation click krke). Then at the end of the document dnt forget to click bibliography and then click built in bibliograph


go to 'references' ---- choose style 'APA' ----- 'click insert citation' then 'add new source' ----- choose the 'type of source' (book, journal article or website or any other) ----- write the details and click OK --- dont worry about how the citation appears

when u finish the document, at the end again go to 'references' ---- choose style 'APA' --- click 'bibliography' and then click built in bibliography ----- it will list all your references automatically.

Last step: dnt forget to replace the word 'bibliography' with 'references' or 'reference list' and highlight full document and change the font to 'times new roman or arial watever sir said' and font size '12'

hope it helps!

for type of source 'website' u can write name of website and URL only

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


Plz see the attached files. u can also refer to lec 3 = time value of money


1- tax rate me 1 kiun minus kiya ap ne . jb k example me to sir ne to 1- tax rate ni kiya?

for calculating benefit after tax we need (1-tax rate)

plz see slide 17 lec 9



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