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Zed Ltd. has sterling silver manufacturing plant in India and is enjoying a buoyant demand for its products as economic growth is about 7% to 8 % which is used to make handicraft pieces, forks, spoons, knives, etc. Sterling silver is an alloy of silver containing 92.5% by weight of silver and 7.5 % by weight of other metals like copper. The demand for sterling silver is growing due to its extrinsic value. It is planning to set-up a new sterling silver plan to cash on the increased demand it is facing. It is estimated that it will require about Rs 5000 crores for the set-up and about Rs 700 crores of working capital to start the new plant. As a highly capital intensive sector what factors will affect the fixed and working capital? Give supporting reasons for answers. |
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Answer» Zed Ltd. has sterling silver manufacturing plant in India and is enjoying a buoyant demand for its products as economic growth is about 7% to 8 % which is used to make handicraft pieces, forks, spoons, knives, etc. Sterling silver is an alloy of silver containing 92.5% by weight of silver and 7.5 % by weight of other metals like copper. The demand for sterling silver is growing due to its extrinsic value. It is planning to set-up a new sterling silver plan to cash on the increased demand it is facing. It is estimated that it will require about Rs 5000 crores for the set-up and about Rs 700 crores of working capital to start the new plant. As a highly capital intensive sector what factors will affect the fixed and working capital? Give supporting reasons for answers. |
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