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MNO Ltd. is considering an investment in one of two machines. The companys cost of capital is 14% and tax rate is 29%. Other information
MNO Ltd. is considering an investment in one of two machines. The company’s cost of capital is 14% and tax rate is 29%. Other information related to both machines are as follows:
Particulars | Machine C | Machine D |
Cost of machine | 2,200,000 | 2,800,000 |
Expected life | 6 years | 6 years |
Annual Income (before Tax & depreciation) | 800,000 | 1,000,000 |
Depreciation is charged on a straight-line basis. You are required to calculate: a. Accounting Rate of Return (ARR) b. NPV c. Payback period
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