Question
Lab U Company plans to replace its machinery with a new one costing P400,000 with an estimated useful life of ten years without scrap value.
Lab U Company plans to replace its machinery with a new one costing P400,000 with an estimated useful life of ten years without scrap value. The old machinery has a book value of P40,000 and can be sold for P 50,000. The acquisition of the new machinery will yield an annual cash savings of P 80,000 before income tax. Income tax rate is 35%
Required: Compute for the following:
23. Net investment on the new machine
24. Net income (after tax)
25. Annual net cash inflows expected from the new machine
26. Payback period (Round answer to 3 decimal places e. g. 4.358)
27. Net present value, assuming that the minimum desired rate of return is 15% (Round present value factor to 4 decimal places; if negative enclose it in parenthesis e. g. (55,000)
28. The discounted cash flows rate of return (Round answer to 2 decimal places e. g. 15.67%) 29. Present value payback (Round answer to 2 decimal places e. g. 10.65)
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