Question
ABC. is contemplating the replacement of one of its machines with a new one that will increase revenue from P125,000,000 to P310,000,000 per year and
ABC. is contemplating the replacement of one of its machines with a new one that will increase revenue from P125,000,000 to P310,000,000 per year and reduce cash operating costs from P120,000,000 to P100,000,000 per year. The new machine will cost P48,000,000 and have an estimated life of 10 years with no salvage value. The firm uses straight-line depreciation and is subject to a 30 percent tax rate. The old machine has been fully depreciated and has no salvage value. What is the incremental (relevant) cash inflows generated by the replacement?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started