A company is proposing to invest Rs 200 lakhs in a new

project.
The proposed capital structure is as follows:
50% equity – expected dividend 12%
10% preference shares @ 12% dividend
20% term loan @ 16% repayable in 9 years
20% debentures costing 14%
All tradeable securities will carry a face value of Rs 100 and
will carry a flotation cost of 3%
All securities except equity is redeemable at the end of 10
years.
80% of capital will be invested in & Plant & machinery and
20% in working capital
Assets will be depreciated @ 15% wdv and sold on going
basis at the end.
Sales shall be @ Rs 140 lakhs in the first year with 3% growth
rate every year till the end of 8 years.
Cost of goods sold @ 50% of sales
Taxes are @ 30%
Derive the cash flow template & demonstrate the effect of:
1. change in sales when growth rate increases to5%
2. changing value of cost of capital @ 3% growth rate