Solution:

Cash Outflows (Beginning of the Project) Amount (In Rs. Lakh)

Cost of Capital Expenditure 1000
Add: Working Capital required 200
Total Initial outflow 1200

Year (in Rs. Lakh)

Particulars
1 2 3
Sales Revenue 4200 7800 10200
Less: Variable Costs 2520 4680 6120
Less: Fixed Costs 1200 1800 2400
Less: Depreciation 350.00 227.50 147.88
Earnings Before Taxes 130.00 1092.50 1532.13
Less: Taxes (at 35%) 45.5 382.4 536.2
Earnings after taxes 84.50 710.13 995.88
Add: Depreciaition 350.00 227.50 147.88
Less: Additional Working Capital 200
Less: Additional Capex
FCFF 434.50 937.63 943.76
Add: Recovery of Working Capital
Add: Salvage Value
Less: Capital Gains tax on Salvage Value
Terminal FCFF

NPV ₹ 3,013.42 Lakhs

 Depreciaition WDV Method
Year Cost (Lakh)
1 1000.00
2 650.00
3 422.50
4 274.63
ear (in Rs. Lakh) 5 178.51
4 5 6 6 116.03
12000 12000 12000 Written Down Value at 6th Year
7200 7200 7200
2400 2400 2400
96.12 62.48 40.61
2303.88 2337.52 2359.39
806.4 818.1 825.8
1497.52 1519.39 1533.60
96.12 62.48 40.61
250
100
1343.64 1481.87 1574.21
650
100
8.60
2315.61
n WDV Method
Depreciation
350.00
227.50
147.88
96.12
62.48
40.61
75.42