A Company makes an investment , Rs 952,900/- in an energy saving equipment which has an
economic life of 10 Years. The equipment generates a savings of Rs 242,600 in year 1 and is
likely to grow at 4% p.a. Depreciation estimated as a % of savings is about 3% each year.
Marginal Tax rate applicable for the company is 30% pa. The company proposes to maintain
a debt ratio of 25% with the cost of debt at 9%. The Firm’s shareholders expect a return on
their capital at 16% pa.
You are required : calulate irr
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