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##### SOLVED NUMERICAL PROBLEMS
1. Calculate the initial investment cost of an expansion project, if:
 Cost of machine: Rs 10,00,000 Cost of transporting machine: 50,000 Other installation expenses: 20,000 Increase in net working capital: 60,000 Cost of training personnel: 20,000 Initial cost of advertisement: 20,000 Tax rate: 30% Solution (i) Installation of machine: Rs 10,70,000 (ii) Training cost: 20000 × (1−0.30) 14,000 (iii) Increase in net working capital: 60,000 (iv) Initial advertising cost: 20,000 Total 11,64,000

2. A firm has to replace the existing machine. The cost of the new machine, transport and installation are respectively Rs 10,00,000; Rs 1,00,000 and Rs 20,000. The old machine ...

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