SANKALP

KASHYAP -
19212450

BUSINESS FINANCE CIA 3

 Cash Inflow Operating

Particulars Year 1 Year 2 Year 3

A Sales Revenue 1000000 2000000 800000

B Less: - relevant/increment Cost
Material, Labour and Overhead 400000 750000 350000
Incurred
Rent Payable 50000 50000 50000
Rent Sacrificed 37500 37500 37500
Depreciation 300000 300000 300000
Total 787500 1137500 737500

C(A-B) Earnings Before Taxes 212500 862500 62500

D Less: - Taxes 106250 431250 31250

E(C-D) Earning After Tax 106250 431250 31250

F ADD: - Depreciation 300000 300000 300000

G(F+E CFAT 406250 731250 331250

)
S No. Cash Outflow

Particulars Amount (in Rs.)

Cost of equipment 900000
Modification Cost 30000
Installation Cost 60000
Testing Cost 90000
TOTAL 1080000
 NET PRESENT VALUE

Particulars Year Amount PV Factor TOTAL PV

Cash Outflows 0 1080000 1 -1080000

Operating CFAT 1 406250 0.833 338406
Operating CFAT 2 731250 0.694 507488
Operating CFAT 3 331250 0.579 191793
Salvage Value 3 180000 0.579 104220

NPV 61907

PAYBACK PERIOD

YEAR CASHFLOWS CUMULATIVE

CASHFLOW
0 -1080000 -1080000
1 406250 -673750
2 731250 57500
3 331250

Payback Period= 1 Year + (6,73,750÷ 7,31,250)

= 1 Year + 0.921

= 1.9 Years