1. Suppose you have purchased an equipment of RS. 95000, which has a salvage value of RS. 5000 and is depreciated at a straight line method for next 5 years. With the adoption of machinery the company is able to increase its sales by Rs.42000 for next 5 years, the operating expenses incurred is Rs.15000 with an expected growth of 2% per year for next 5 years. The tax rate is of 35%.
The equipment is sold at the end of 5 years at its salvage value.
Considering the cost of capital to be 12%
Calculate NPV and IRR of the given project.
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