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Tabucol Aggregates, Inc. plans to replace one of its machines with a new efficient one. The old machine has a net book value of P120,000
Tabucol Aggregates, Inc. plans to replace one of its machines with a new efficient one. The old machine has a net book value of P120,000 with remaining economic life of 4 years. This old machine can be sold for P80,000.If the new machine were acquired, the cash operating expenses will be reduced from P 240,000 to P 160,000 for each of the four years, the expected economic life of the new machine. The new machine will cost Tabucol a cash payment to the dealer of P 300,000. The company is subject to 32 percent tax rate and for this kind of investment, a marginal cost of capital of 9 percent. The present value of annuity of 1 and the present value of 1 for 4 periods using 9 percent are 3.23972 and 0.70843, respectively. The net present value to be provided by the replacement of the old machine is______? Please answer. Thanks
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