Cost of plant and equiment(Rs.

lakh)
Working capital(Rs.lakh)
Sales (lakh units)
Selling price per unit (Rs.)
Variable cost per unit (Rs.)
Fixed overheads (excluding depreciation)(Rs.lakh)
WDV rate of depreciation
Tax rate
Cut-off rate

100
40
1
120
60
15
0.25
0.4
0.12

Year
Investment in plant and equipment
Investment in working capital
Total initial investment
Sales
Variable costs
Fixed cost
Depreciation
Earnings before tax
Tax
Earnings after tax
Operating cash flows after tax
Salvage value
Release of working capital

0
-100
-40
-140

CFAT
NPV
Workings
Depreciation
WDV at the beginning of the year
Depreciation
WDV at the end of the year

120
60
15
25
20
8
12
37

120
60
15
18.75
26.25
10.50
15.75
34.50

120
60
15
14.06
30.94
12.38
18.56
32.63

37

34.50

32.63

100
25
75

75
18.75
56.25

56.25
14.06
42.19

16.88

120
60
15
10.55
34.45
13.78
20.67
31.22

Sensitivity Analysis
Percent
Deviation
from base
case

120
60
15
7.91
37.09
14.84
22.25
30.16
23.73
40

31.22

93.89

42.19
10.55
31.64

31.64
7.91
23.73

SELLING PRICE
NPV
Selling price
108.00
120.00

16.88
-9.08
16.88

VARIABLE COST
0%
60.00
10%
66.00

16.88
16.88
3.90

-10%
0%

NPV
V.C (0%)
5%

SELLING PRICE AND VARIABLE COST

S.P (0%)
5%
16.88
120.00
126.00
60.00
16.88
29.86
63.00
10.39
23.37

The project becomes unviable when the selling price

decreases by 10%. In other situations, it remains viable