Drabanga plc has purchased a robot.they have paid an initial investment of an 50000 for maket survey and for manufacturing 400000.the product life is expected to be 4 years abd the company expects scrap proceed of 75000 end of project. Demand estimated
Year1. Year 2. Year 3. Year 4
Demand. 3000. 4000. 5000. 6000
The selling price is 60 and the variable selling per unit 20 .The annual fixed cost of estimated 75000 which includes 50000 depreciation and 5000 apportioned headquarter cost
Tax is paid at the rate of 30% and is payable I. The same Year working capital is required which is equal to 10% of annual sales this will need to be placed at the start of each year
Capital allowance are available at the rate 25% reducing balance the company had a cost of capital of 10%
Calculate the npv of rhe project
Calculate the irr of the project