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Fundamentals of Financial Management, Third Edition by Vyuptakesh Sharan

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SOLVED NUMERICAL PROBLEMS
  1. Calculate the initial investment cost of an expansion project, if:

    Cost of machine:

    Rs 10,00,000

    Cost of transporting machine:

    50,000

    Other installation expenses:

    20,000

    Increase in net working capital:

    60,000

    Cost of training personnel:

    20,000

    Initial cost of advertisement:

    20,000

    Tax rate:

    30%

    Solution

    (i) Installation of machine:

    Rs 10,70,000

    (ii) Training cost: 20000 × (1−0.30)

    14,000

    (iii) Increase in net working capital:

    60,000

    (iv) Initial advertising cost:

    20,000

    Total

    11,64,000

     

  2. A firm has to replace the existing machine. The cost of the new machine, transport and installation are respectively Rs 10,00,000; Rs 1,00,000 and Rs 20,000. The old machine ...

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