Mineral Economics, Mine Planning, Systems Engineering · Mineral Economics · 2 marks · Numerical answer
A3-year project costs₹300 crore at year0. Year1–3 revenues are200,300,400 crore and operating costs30,40,35 crore. Tax is30%,discount10%,and straight-line depreciation has zero salvage. Find NPV in crore to two decimals.
Annual straight-line depreciation is300/3 =100 crore. Operating cash flow is after-tax profit plus the depreciation added back: (revenue − operating cost −100) ×0.70 +100. This gives149,212 and285.5 crore in years1–3. Their discounted present values total525.16 crore. Subtracting300 crore initial capital gives NPV225.16 crore. Depreciation reduces taxable profit but is not itself a cash payment.
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