i) Calculate ARR for the investment project? ii) Calculate the Net Present Value of the Project assuming the cost of capital is 10%
Amcor PLC has decided to air-condition its factory to improve its performances. The cost of
the air-condition is Rs 1 600 000.It has 5 year useful life with no residual value,
Further additional maintenance expense of Rs 240 000 per annum will be incurred for the air
conditioner. The company
annual labour cost savings due to employees performance during its life time is given below.
Year 1 400 000
Year 2 450 000
Year 3 750 000
Year 4 1550 000
Year 5 1650 000
Required:
i) Calculate ARR for the investment project?
ii) Calculate the
Year 0 1 2 3 4 5
DCF 1 0.909 0.826 0.751 0.683 0.621
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