Units in old Units in new assembly

Partiulars ₹ 40,000.00 ₹ 53,000.00 ₹ 55,000.00

SP per unit ₹ 19,990.00 ₹ 19,990.00 ₹ 19,990.00
Material cost per unit ₹ 7,500.00 ₹ 7,500.00 ₹ 7,500.00
Labour cost ₹ 1,600.00 ₹ 2,700.00 ₹ 2,700.00
Mfg oehead ₹ 1,800.00 ₹ 2,350.00 ₹ 2,350.00
Dealer commission ₹ 800.00 ₹ 1,100.00 ₹ 800.00
Advertise exp ₹ 20,000,000.00 ₹ 20,000,000.00 ₹ 40,000,000.00
Dep. ₹ 320,000.00 ₹ 2,000,000.00 ₹ 2,000,000.00
working cap ₹ 4,100,000.00 ₹ 5,000,000.00 ₹ 5,100,000.00
Tax rate 35% 35% 35%

OLD ASSEMBLY LINE New ASSEMBLY LINE

Sales Revenue ₹ 799,600,000.00 ₹ 1,059,470,000.00 ₹ 1,099,450,000.00
Less
Material cost ₹ 300,000,000.00 ₹ 397,500,000.00 ₹ 412,500,000.00
Labour cost ₹ 64,000,000.00 ₹ 143,100,000.00 ₹ 148,500,000.00
Mfg O/h ₹ 72,000,000.00 ₹ 124,550,000.00 ₹ 129,250,000.00
dealer commision ₹ 32,000,000.00 ₹ 58,300,000.00 ₹ 44,000,000.00
advertise exp ₹ 20,000,000.00 ₹ 20,000,000.00 ₹ 40,000,000.00
EBDT ₹ 311,600,000.00 ₹ 316,020,000.00 ₹ 325,200,000.00
Dep. ₹ 320,000.00 ₹ 2,000,000.00 ₹ 2,000,000.00
EBT ₹ 311,280,000.00 ₹ 314,020,000.00 ₹ 323,200,000.00
Tax ₹ 108,948,000.00 ₹ 109,907,000.00 ₹ 113,120,000.00
PAT ₹ 202,332,000.00 ₹ 204,113,000.00 ₹ 210,080,000.00
Operating cash inflow(PAT+DEP) ₹ 202,652,000.00 ₹ 206,113,000.00 ₹ 212,080,000.00
Increamental cash inflow ₹ 3,461,000.00 ₹ 9,428,000.00
PVIFA@15%,5 years ₹ 3.35 ₹ 3.35
PV of Incemental cash flow ₹ 11,601,808.79 ₹ 31,604,118.26
Recovery of incremental work cap in 5th year ₹ 900,000.00 ₹ 1,000,000.00
PV of INC WR VC ₹ 447,459.06 ₹ 497,176.74
Total PV of Incremental cash in flow ₹ 12,049,267.86 ₹ 32,101,295.00

Cash outflow in year 0

Cost of new assembly line ₹ 10,000,000.00 ₹ 10,000,000.00
less sale of old assembly line ₹ 1,200,000.00 ₹ 1,200,000.00
less Tax savings on sale of old assembly ₹ 140,000.00 ₹ 140,000.00
add incremental woking cap ₹ 900,000.00 ₹ 1,000,000.00
Total Cash outflow ₹ 9,560,000.00 ₹ 9,660,000.00
NPV ₹ 2,489,267.86 ₹ 22,441,295.00
Best option
 ₹ 59,000.00
₹ 18,990.00
₹ 7,500.00
₹ 2,700.00
₹ 2,350.00
₹ 800.00
₹ 20,000,000.00
₹ 2,000,000.00
₹ 5,300,000.00
35%

EMBLY LINE
₹ 1,120,410,000.00

₹ 442,500,000.00
₹ 159,300,000.00
₹ 138,650,000.00
₹ 47,200,000.00
₹ 20,000,000.00
₹ 312,760,000.00
₹ 2,000,000.00
₹ 310,760,000.00
₹ 108,766,000.00
₹ 201,994,000.00
₹ 203,994,000.00
₹ 1,342,000.00
₹ 3.35
₹ 4,498,592.14
₹ 1,200,000.00
₹ 596,612.08
₹ 5,095,204.22

₹ 10,000,000.00
₹ 1,200,000.00
₹ 140,000.00
₹ 1,200,000.00
₹ 9,860,000.00
-₹ 4,764,795.78