Saswat Dairy Ltd. (SDL) is planning to buy dairy plant costing ₹400 lakh. Milk Board provides 10% subsidy on the capital cost. It can process milk to produce cheese with the capacity of 1,800 tonnes per annum. The sellin

Saswat Dairy Ltd. (SDL) is planning to buy dairy plant costing ₹400 lakh. Milk Board provides 10% subsidy on the capital cost. It can process milk to produce cheese with the capacity of 1,800 tonnes per annum. The selling price of cheese is taken as ₹50 per Kg. The management expects the life of the plant at 8 years and the depreciation shall be computed using straight line method. However, the plant can be sold at ₹50 lakh at the end of its useful life. The utilisation of plant is expected as below: Years 1 2 3 4 to 8 Capacity Utilisation 60% 70% 80% 90% The variable cost constituting primarily of the raw material (milk) is placed at 40% while the fixed expenses are ₹300 lakh per annum. The company pays tax @35%. The additional working capital required is ₹100 lakh. Find the following (b) NPV of the project