M/s ABC Ltd. Is considering setting up a 15
New plant costing Rs. 18 lakhs. The
Operational and maintenance cost
(excluding depreciation) are expected to be
Rs. 3 lakhs. The useful life of the plant is 10
Years with negligible salvage value. The rate
Of depreciation is 30% (written down value
Method). The plant will generate an income
Of Rs. 7 Lakhs per annum. The tax rate for
The firm is 40%.
Calculate the net present value, internal rate
Of return and benefit cost ratio taking the
Cost of capital as 12%. The p.v. Factors at
12% for year 1 to 10 are •893, -797, -712,
•636, -567, 507, -452, •404, •361 and -322
Respectively.
PV factors at 13% for year 1 to 10 are -885
•783 -693, •613, -543, -480, -425, -376, -333,
•295 respectively.
MCS-035 2 2

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