The June Mfg. Co. plans to acquire a new machine costing P250,000 to replace the old equipment that is now being used. Freight charges on the new equipment are estimated at P20,000 and it will cost P15,000 to install. The estimated life of the new equipment is 5 years and the estimated salvage value is set at P35,000. Employees must be trained to operate the new machine at a cost of P15,000. This amount will be capitalized for financial and tax purposes. Additional working capital of P50,000 is also needed. The old equipment has a net book value of P50,000 and has still a remaining useful life of 5 years. It can be sold for P60,000. If not replaced, it must be overhauled at a cost of P20,000. This cost can be deducted for tax purposes in the year it is incurred. REQUIRED: 1. How much is the cost of the new equipment for financial accounting purposes? 2. How much is the "net investment" of this replacement project for decision-making purposes? Use a tax rate of 30%. Exercise 6-4 Using the data of Exercise 3, if the new equipment can caused cash cost savings in materials, labor, and overhead of P80,000 per year, compute for the "net returns" of the first year. REQUIRED: 1. Compute for "net retums" of Ycar 1. Give 2 solutions. Exercise 6-5 Determine the amount of the "net investment" required based on the following on a project being proposed: Exercise 6-6 Compute for the "net returns" in each of the following cases: 1. Annual accounting net income on a proposed project is estimated at P200,000. The net investment of P650,000 includes fixed asset cost of P500,000 with a useful life of 5 years. 2. Cash income from operations of P200,000 is to be realized on an investment of PS00,000 in fixed assets. The economic useful life has been estimated at 10 years. Use a tax rate of 30%