1. A company plans to buy a new asset costing P 650,000. This will increase the cash inflow by P150, 000 yearly. The estimated useful life of the new asset is 10 years, no scrap value. The company is expecting a 15% rate of return.

a. Compute for the net present value of the project. ?

b. Should the new asset be purchased?

2. ABC Company purchased a new equipment costing P 350,000. Costs to transport and install the new asset amounted to P 50,000. The new equipment, with an estimated useful life of 8 years will contribute an annual net cash inflow of P 60,000.

a. How much is the net initial investment?

b Compute for the payback period. ?