Himalayan hotel is going to establish a new machine. The new machine should purchase at Rs 600,000 with useful life 5 years. The machine required installation and transportation cost Rs 100,000. The…

Himalayan hotel is going to establish a new machine. The new machine should purchase at Rs 600,000 with useful life 5 years. The machine required installation and transportation cost Rs 100,000. The working capital required Rs 100,000. The machine will have book salvage value Rs 100,000 and cash salvage value Rs 80,000 at the end of five year. ➤ Production 6,000 units, selling price per unit Rs 200 cash expenses per unit Rs 165 ➤ Tax rate 25 percent ➤ Required rate of return 10 percent

Required: a) Net cash outlay b) Deprecation c) Annual cash flow after tax d) Final year cash flow after tax e) Net present value (NPV) f) Should the hotel purchased new machine?