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Academic MBA Question:

A shoe manufacturer
is considering buying a machine which will enhance its production efficiency.
The machine would cost Rs 2,40,000 and has a useful life of 5 years. A salvage
value of Rs 40,000 is realizable at the end of 5 years. The machine will bring
in cost savings of Rs 70,000 every year

The tax rate is
30%. Assume 20% cost of capital. Compute the NPV of the proposal. (10 Marks)


Academic Assignment Answer:

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