1. You are required to find out the Pay Back Period.

The relevant details including estimated yearly expenditure and sales are given below: All sales are on cash. Corporate income tax is 30%. Interest on capital may be assumed to be 12% Particulars Initial investment required Estimated annual sales Cost of Production (estimated) Direct material Direct Labour Administration costs Selling and distribution costs

8,00,000 12,,00,000 40,000 50,000 20,000 10,000

The economic life of the machine 1 is 3 years. The scrap value is Rs. 80,000.

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