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want to expand in the Western part of India. Government as a part of privatization policy is
ready to sell its own refinery situated in western India, for a price of Rs 1,500 million.
According to company appointed valuers who had studied the proposal, the refinery needs
an additional investment of Rs. 6,000 million in fixed assets and Rs. 300 million for
working capital before the start of the operations. At the end of the planning horizon of 5
years the fixed assets of the plant can be sold for Rs. 3,000 million. HPC has paid Rs. 25
million to the valuers and will pay further Rs. 15 million in case the HPC takes up the
project.
The corporate planning department of the company has estimated the profit from the
refinery operation as given in the table below