HEALTY DRINKS LTD.

PROJECT COST 2000 million

DEBT (50%) 1000 million
EQUITY (50%) 1000 million

Risk Free Returns 3%

Risk Premium 5%

Capacity 100 million packs of 1 litre each

Rate of Inflation 5%

Consultation Fee 50 million

Deprecition Rate 25%

Year / Details I II III IV

Capacity Utilistaion 70% 80% 90% 100%

No of Units (in million) 70 80 90 100

Selling Cost per pack (Rs.) 100.00 105.00 110.25 115.76

Variable Cost per unit (Rs.) 40.00 42.00 44.10 46.31

Fixed Cost per unit (Rs.) 60.00 63.00 66.15 69.46

Corporate & Administration (Rs.) 20.00 21.00 22.05 23.15

Other Fixed Cost (Rs.) 40.00 42.00 44.10 46.31

Total Sales 7000 8400 9923 11576

Total Variable Cost 2800 3360 3969 4631

Total Fixed Cost 6000 6300 6615 6946

Consultation Fee 25 25 0 0

Total Cost 8825 9685 10584 11576

Profit /(Loss) before Interest & Depreciation -1825 -1285 -662 0

Interst 30 30 30 30

Depreciation @ 25% WDV 500 375 281 211

Profit / (Loss) before Tax -2355 -1690 -973 -241

Tax (as loss, tax=0) 0 0 0 0

Profit / (Loss) after Tax -2355 -1690 -973 -241

Cash Flow -1855 -1315 -692 -30

Residual Value of Plant

Value of Bldg

Net Cash Flows -1855 -1315 -692 -30

NPV @ discount rate of 5% ₹ -3,409.06

Firms Cost of Capital

Real
Nominal

Project Cost of Capital

Real
Nominal
V

100%

100

121.55

48.62

72.93

24.31
48.62

12155

4862

7293

12155

30

158

-188

0
-188

-30

150
100

220