Vishal Engineering Case Solutio

VISHALENGINEERINGENTERPRISES wooing dissolving agent DATAGIVEN occurAssets TotalSales Growth appraise Cut? offrate Option1 Purchase worth Pre taxationBenefits Depreciation Option2 LeaseRental maintenance PostTax addressofBorrowing Option3 carryPurchase member Interestrate UsefulLife summary? Option1? OwnershipandOperation RupeesinLakhs Sr. No 1 2 3 4 5 6 7 8 Particulars IntialCost BenefitsReceived Depreciation(WDV25%) TaxSheildOnDepreciation(3x. 35) NetSalvage evaluate PostTaxCash meld(1+2+4+5) DiscountFactor12% Present pry(6/7) TOTALNPV 0 ? 5. 000 1 18. 000 18. 750 6. 563 ? 75. 000 1. 000 ? 75. 000 24. 563 0. 893 27. 510 2 18. 000 14. 063 4. 922 22. 922 0. 797 28. 753 3 18. 000 10. 547 3. 691 21. 691 0. 712 30. 475 Year 4 18. 000 7. 910 2. 769 20. 769 0. 636 32. 680 222. 368 5 18. 000 5. 933 2. 076 20. 076 0. 567 35. 382 6 18. 000 4. 449 1. 557 19. 557 0. 507 38. 603 7 18. 000 3. 337 1. 168 19. 168 0. 452 42. 374 8 18. 000 2. 503 0. 876 6. 000 24. 876 0. 404 61. 592 270 Crores 2 56 Crores 23% 12% 75 Lakhs 18 Lakhspertwelvemonth 25% WDV 14 Lakhsperyear 1. 75 Lakhsperyear 9. 50% 18. 75 Lakhsperyear 12% 8 Years Analysis? Option2? LeaseContract RupeesinLakhs Sr. Particulars No 1 IntialCost 2 Depreciation(WDV25%) LossofTaxSheildOnDepreciation 3 (2x. 35) 4 Lease stipend TaxSheildOnLeasePayment 5 (4x. 35) 6 LossofSlavage care for 7 PostTaxCash pay heed(1+3+4+5+6) 8 DiscountFactor9. 5% 9 Present cherish(6/7) 10 TOTALNPV? Cash extend 11 LRt(1? Tc) 12 Presentvalue(11/8) 13 PresentValueoflease 0 75. 000 1 18. 750 ? 6. 563 ? 14. 000 4. 900 75. 000 1. 000 75. 000 ? 14. 663 0. 913 ? 16. 055 ? 9. 00 ? 9. 965 2 14. 063 ? 4. 922 ? 14. 000 4. 900 ? 12. 022 0. 834 ? 14. 415 ? 9. speed of light ? 10. 911 3 10. 547 ? 3. 691 ? 14. 000 4. 900 ? 9. 791 0. 762 ? 12. 855 ? 9. vitamin C ? 11. 948 Year 4 7. 910 ? 2. 769 ? 14. 000 4. 900 5 5. 933 ? 2. 076 ? 14. 000 4. 900 6 4. 449 ? 1. 557 ? 14. 000 4. 900 7 3. 337 ? 1. 168 ? 14. 000 4. 900 8 2. 503 ? 0. 876 ? 14. 000 4. 900 ? 6. 000 ? 7. 976 0. 484 ? 16. 485 ?7. 869 ? 6. 176 ? 4. 657 ? 3. 268 0. 696 0. 635 0. 580 0. 530 ? 11. 312 ? 9. 723 ? 8. 028 ? 6. 168 ? 20. 043 ? 9. 100 ? 9. 100 ? 9. 100 ? 9. 100 ? 9. 100 ? 3. 083 ? 14. 326 ? 15. 687 ? 17. 177 ? 18. 809 ? 111. 903 FOSSILS 1 VISHALENGINEERINGENTERPRISESCASESOLUTION Analysis? Option3? take onandPurchase TotalCost Interest office TotalCost+interest= HirePurchaseInstallmentperyear 75 Lakhs 72 Lakhs 147 18. 375 Lakhs LifeExp. 8 years RupeesinLakhs Sr. No 1 2 3 4 5 6 7 8 9 10 11 12 Particulars HirePurchaseInstallment InterestComponent PrincipalRepayment 0 1 18. 375 16. 794 1. 581 ? 10. 916 ? 1. 581 18. 750 12. 188 ? 0. 310 0. 913 ? 0. 339 2 18. 375 14. 567 3. 808 ? 9. 469 ? 3. 08 14. 063 9. 141 ? 4. 136 0. 834 ? 4. 959 3 18. 375 12. 340 6. 035 ? 8. 021 ? 6. 035 10. 547 6. 855 ? 7. cc 0. 762 ? 9. 454 Year 4 18. 375 10. 113 8. 262 ? 6. 574 ? 8. 262 7. 910 5. 142 ? 9. 694 0. 696 ? 13. 936 ? 120. 137 5 18. 375 7. 887 10. 488 ? 5. 126 ? 10. 488 5. 933 3. 856 ? 11. 758 0. 635 ? 18. 511 6 18. 375 5. 660 12. 715 ? 3. 679 ? 12. 715 4. 449 2. 892 ? 13. 502 0. 580 ? 23. 274 7 18. 375 3. 433 14. 942 ? 2. 231 ? 14. 942 3. 337 2. 169 ? 15. 004 0. 530 ? 28. 321 8 18. 375 1. 206 17. 169 ? 0. 784 ? 17. 169 2. 503 1. 627 6. 000 ? 10. 26 0. 484 ? 21. 342 ?It(1? Tc) ?PRt Depriciation Dt(Tc) NSVn Total(4to8)? 6 DiscountFactor9. 5% PresentValue PresentValueofHire? Purchase 1. 000 Hencefromtheabovewe touchthatthecostoftheHire? PurchaseoptioninPresentvalueTermismorethatthatoftheleasingoption. SoVishalEnterprisesshouldgoforLeasingoptioninsteadofHirePurchase. AlsoiftheoptionofPurchasingandOwningtheequipmentisconsidered,ithasaveryfavourableNPVandthis footbeconsidered asthebestoptionforVishalEnterprises. FOSSILS 2