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Ilagan Corporation is contemplating the replacement of one of its bottles with a new one that will increase revenue from Php25,000 to Php31,000 per year
Ilagan Corporation is contemplating the replacement of one of its bottles with a new one that will increase revenue from Php25,000 to Php31,000 per year and reduce cash operating costs from Php12,000 to Php10,000 per year. The new machine will cost Php48,000 and have an estimated life of 10 years with no salvage value. The firm uses straight line depreciation and its subject to a 46 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
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