A Water Processing factory has finalized feasibility study of water distribution scheme. The scheme needs installation of plant that operated for 10 years. The catalogue price of the plant is Rs…

A Water-Processing factory has finalized feasibility study of water distribution scheme. The scheme needs installation of plant that operated for 10 years. The catalogue price of the plant is Rs 700,000. The commissioning and arrangement of plant layout needs Rs 230,000. An additional amount of Rs 120,000 is needed for the registration of the factory and overall project management. The estimated book and cash salvage value of the plan after 10 years will be Rs 50,000 and Rs 80,000 respectively. The estimated sales price per bottle is Rs 20 and operating cash expenses is Rs 16 per bottle. The targeted annual production and sales is 70,000 bottles. The desired return on investment is 12 % p.a. and tax payable by the factory on overall income is 25%. Required: a. Initial capital outlay b. Estimated annual cash inflows c. Estimated final year cash inflows d. Net Present Value e. Desirability of the project