Capital cost of product a is 5 crores and initial capital cost of product b is 3 crores. Life of product a is 30 years and life of product b is 10 years.
The difference in initial capital cost is 2 crores (5-3). If the difference in initial capital cost of 2 crores is kept on a rate of interest of 8%, 9% or 10% for the period of 30''years and on the 10th year and 20th year a recurring capital cost of 1.5 crores is paid.
Then at the end of 30 years what is the total capital cost incurred on product b after taking into account the interest earned, the payment of recurring capital cost and the initial capital cost paid of 3 crores.
Also pls take into account if today the price in the 10th and 20th year is assumed at 1.5 crores each then what is the npv, etc as the price 10 years later maybe different.
Prepare a financial model.
Minimum 100 words