Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answer this question using ONLY the table format as above. cash ouflow for year 5 equals 59500. calculate npv , answer a,b,c . htTSREVIEW EXAMINATIONS

image text in transcribedimage text in transcribedimage text in transcribed

Answer this question using ONLY the table format as above. cash ouflow for year 5 equals 59500. calculate npv , answer a,b,c .

htTSREVIEW EXAMINATIONS 347 Question 6 (16 Marks) Graphic Limited provides you with the following data on which to evaluate a proposal submitted to replace an existing computer system. Existing $250,000 7 Years Proposal Initial purchase cost Expected life End of life scrap value When purchased Depreciation rate 20 % on Prime Cost Current trade-in value Positive before tax cash flows per year $350,000 5 Years $10,000$40,000 Two years ago New today $100,000 N/A $75,000 $105,000 Additional Information: (i) Company tax rate is 30% payable at the end of the income year. (ii) Cost ofcapital is 10% after tax. Required: (a) Calculate the Net Present Value of the existing system's future cash lows. (b) Calculate the Net Present Value of the proposal's future cash flows (c) Recommend whether or not to accept the proposal. Provide reasons

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Carl S. Warren, William B. Tayler

16th Edition

0357715225, 9780357715222

More Books

Students also viewed these Accounting questions