Bhimsen company is considering investing in a machine to produce bowling b
The building which is proposed to be used in the production process can be s
for immeidately an after tax amount of 150,000. If you go ahead with the investment the building can be sold at the end 5th year at an after tax amoun 150,000. The cost of the machine is 100,000 and it is expected to last 5 years. the end of 5 years, the machine will be sold at estimated value of 30000. The machine can be depreciated on a straight line basis to value of 20000. The production units during 5 year of machine life is expected to be 5000, 8000 , 12000 , 10000 and 6000 units. The price of bowling balls will be Rs 20 per un the first year`. And the price is expected to increase at 2% per year. The first y production cost will be Rs 10. And it is expected to increase at 10% per year. T project requires an immediate( year 0) investment in working capital of 10000 The net working capital every year is 10% of sales. The tax rate is 34%. Discounting rate is 10% o produce bowling balls. on process can be sold ahead with the time 0 1 2 t an after tax amount of OP Bal 100000 84000 ected to last 5 years. At Dep 16000 16000 value of 30000. The ue of 20000. The Closing Bal 100000 84000 68000 to be 5000, 8000 , will be Rs 20 per unit in Dep Tax Shield 5440 5440 per year. The first year se at 10% per year. The king capital of 10000. Initial Inv -100000 x rate is 34%. Salvage Value Capital Gain tax Opp Cost -150000
Investment Preference, Risk Perception, and Portfolio Choices Under Different Socio-Economic Status: Some Experimental Evidences From Individual Investors