Name :- Rohit R.

Panpatil
Roll No. :- 191155
Div.:- MMS-1-Finance
Sub :- Financial Mangement

Capital Budgeting - Case Study

1) Calculation of Total cost of Tea & Coffee Paid to Vendor

Cost Of Tea Per/Year = 50 Employees X 3 (Cost Per Cup) X 3 (Times in Day)

X 23 (days) X 12 (Month)
Rs. 124200 Per/Year

Cost Of Coffee Per/Year = 50 Employees X 5 (Cost Per Cup) X 3 (Times in Day)

X 23 (days) X 12 (Month)
Rs. 207000 Per/Year

Labour Charges Per/Year = 500 X 12 = 6000

Total Cost Per/Year = 124200+207000+6000

Rs.337200 Per/Year

2) Calculation of Maintaning vending Machine Per Year

Particulars Rs.

Maintenance cost 30000

Spare Parts 10000
Electricity 6000
Coffee 16560
Tea 11040
Cups 22500
Milk 33600
Sugar 10800
Labour Charges 18000
Total 158500
(+) Depreciation 40000
Total Cost of Vending Machine Per/Year 198500

3) Corporate Tax = 35%

4) Profit = 1 - 2
= 337200 - 198500
= 138700
 PAT = 138700 - 48545
= 90155

5) CFAT = PAT + Depreciation

= 90155 + 40000
= 130155

year Cash Inflow P.V. Factor @10% P.V.C.I

1 130155 0.909 118311
2 130155 0.826 107508
3 130155 0.751 97746
4 130155 0.683 88896
5 130155 0.621 80826
TPVCI = 493287

NPV = TPVCI - TPVCO

= 396530 - 200000
= 196530

As per Calculation of NPV Rs.196530 is possitive So this Proposal is Acceptable .

and as a CFO I'll Advice to CEO to Install that Vending Machine .