3. A manufacturer is exploring a proposed production


3. A manufacturer is exploring a contemplated evolution of guerdon virtue widgets. The required utensil would require Rs 2 lakhs and has a helpful history of 5 years. For the object of tax, appropriate backbiting undisputed on the utensil is 20 percent on written down estimate cause. The salvage estimate is realizable at the end of 5 years. Initial launched chief required is Rs 100,000 and is expected to stay regular year on year. Widgets can be sold at Rs 8 each. Around 75,000 widgets can be sold per year. A coin unroving require of Rs 50,000 is expected to be incurred every year. Variable require is estimated to be Rs 4 per widget. The tax reprimand is 30%. 

Assume 20% require of chief. 

(a) Evaluate the offer domiciled on its NPV. (5 Marks) 

(b) Would the boarding firmness be the selfselfcorresponding domiciled on IRR admission? Explain. 

2. Companies X and Y are into the selfselfcorresponding matter delay irrelative chief structures. 

                                                              X                  Y 

Number of uncollected equity portion-outs 200000 100000 

Face Estimate per portion-out (Rs) 10 10 

Market value per portion-out (Rs) 15 20 

Dividend per portion-out (Rs) 2 3 

Growth in dividend (YOY %) 0% 10% 

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