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FIN722 Corporate Finance Assignment No 01 Solution & Discussion Due Date:16-May-2016

FIN722 Corporate Finance Assignment No 01 Solution & Discussion Due Date:16-May-2016 

Case: Beverages Limited is considering expansion of its business operations because of rise in demand of its beverage products. A new plant has been decided to install by the company that costs Rs. 1,650,000. Moreover, net working capital at start of project is Rs. 475,000. This investment in networking capital will be recovered at the end of useful life of plant which is estimated to be 5 years. Plant’s salvage value is estimated to be Rs. 325,000. Following are the Pre-tax cash inflows which are expected to be generated at end of each year by this new installation: Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Cash Inflows Rs. 525,000 Rs. 610,000 Rs. 675,000 Rs. 725,000 Rs. 800,000 Depreciation method adopted by company is straight line. Moreover, company’s targeted debt to equity ratio is 40:60 with cost of equity 14% and before tax cost of debt 12%. Company falls in tax bracket of 35%. Required: Based upon above provided information, you are required to: 1) Calculate Weighted Average Cost of Capital (WACC). 2) Calculate Net Present Value (NPV) of the project. 3) Calculate Internal Rate of Return (IRR) by using interpolation formula. 4) Analyze whether the project is feasible to undertake. Provide conceptual rationale in support of your answer.

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Replies to This Discussion

please yaar share the solution I am very much up set for IRR please dont's take tension of copy paste

A.A  brother,

net present value kon c amount pa nikalni hai aur kis rate pay 

Any one with the Solution please.

a.a kindly please assignment format bta day mein is k lecture ni liye is liye understand ni ho rha 

please is me thora describe kar dy k discount factor missing hai usy kesy find krna hai or please irr me upper or lower ko kesy estimate krna hai please

hello please share your answers

ap ka IRR kafi zyada aa raha ha. mera aik set of values se 15.35% aur dosri set of values se around 17 % aaya ha. 17% wali value ko jb check kerain tu net present value zero tu nahi per kuch thousands mei aati ha.

Hello!

ab toh assignment ka time khatam ho gya hy, plz ap apna solution share kr sakti hain? 

Sure.

Attachments:

assignment 1 solution is being uploaded by the tutor.plz ap sb ne kiya isi method se asignment solve ki the jo tutor ne ki hai.its too lenthy procedure consist of many steps.usmey bht se step to mene adopt he nahe kiye .ap logo ne tutor waley method si ki hai kia?

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