Question No: 04 This is a subjective question, hence you have to write your answer in the Text-Field given below The Exe

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Question No 04 This Is A Subjective Question Hence You Have To Write Your Answer In The Text Field Given Below The Exe 1 (1.08 MiB) Viewed 81 times

Question No: 04 This is a subjective question, hence you have to write your answer in the Text-Field given below The Executive Assistant (EA) to the CFO of ABC Ltd. was given the task of analyzing the value of a renovation project for Plant A. The forecasts, as provided below, was presented to the EA by the plant manager. All values are in INR million. The corporate tax rate is 25% Year 0 1 2 3 4 5 1. Initial Investment (CAPEX) 700 2. Revenues 350 360 370 380 300 90 95 100 105 60 3. Variable costs 140 140 140 140 140 4. Depreciation 14 14 14 14 14 5. Fixed costs 20 20 20 18 18 6. Interest expense 7. Net proceeds to debt 140 30 110 8. Principal on debt which is repaid 70 290 -360 9. Change in Operating Net Working capital Project the Free cash flow to the equity holders with the above data for all years from Year Oto Year 5. If the cost of equity capital is 14%, what is the value to the renovation project for Plant A? Should they go ahead with the renovation? Why or Why not? There are no preferred equity holders. [10]