Please Show ALL Workings VERY Clearly! Hemas PLC is planning to invest in a project today which will operate for four years. Thecompany had incurred a research cost of Rs. 75,000/= 2 years back on this project. Theproject requires an initial investment of Rs. 900,000/= today. The below table shows theprojected accounting information.Year 01Year 02Year 03Year 04Sales470,000520,000600,000750,000(100,000)(60,000)(-) Raw Material(125,000)(200,000)(210,000)(-) Employee Salaries(-) Depreciation(-) Provision for future losses(60,000)(65,000)(70,000)(110,000)(110,000)(110,000)(110,000)(15,000)(15,000)(15,000)(15,000)185,000210,000210,000345,000After computing the NET cash flows from the project for all the 4 years, determine net presentvalue (NPV), payback period and the discounted payback period, assuming the cost of capital to be12%.

Net cash flows: Net cash flows are computed as the sum of EBIT and depreciation since taxes are not…

Hemas PLC is planning to invest in a project today which will operate for four years. The company had incurred a research cost of Rs. 75,000/= 2 years back on this project. The project requires an initial investment of Rs. 900,000/= today. The below table shows the projected accounting information. Year 01 Year 02 Year 03 Year 04 Sales 470,000 520,000 600,000 750,000 (-) Raw Material (100,000) (125,000) (200,000) (210,000) (-) Employee Salaries (-) Depreciation (-) Provision for future losses (70,000) (60,000) (110,000) (60,000) (110,000) (65,000) (110,000) (15,000) (110,000) (15,000) (15,000) (15,000) 185,000 210,000 210,000 345,000 After computing the NET cash flows from the project for all the 4 years, determine net present value (NPV), payback period and the discounted payback period, assuming the cost of capital to be 12%.

Hemas PLC is planning to invest in a project today which will operate for four years. The company had incurred a research cost of Rs. 75,000/= 2 years back on this project. The project requires an initial investment of Rs. 900,000/= today. The below table shows the projected accounting information. Year 01 Year 02 Year 03 Year 04 Sales 470,000 520,000 600,000 750,000 (-) Raw Material (100,000) (125,000) (200,000) (210,000) (-) Employee Salaries (-) Depreciation (-) Provision for future losses (70,000) (60,000) (110,000) (60,000) (110,000) (65,000) (110,000) (15,000) (110,000) (15,000) (15,000) (15,000) 185,000 210,000 210,000 345,000 After computing the NET cash flows from the project for all the 4 years, determine net present value (NPV), payback period and the discounted payback period, assuming the cost of capital to be 12%.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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