Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The management of Fine Electronics LLC is considering to purchase an equipment to be attached with the main manufacturing machine. The equipment will need an

image text in transcribed
The management of Fine Electronics LLC is considering to purchase an equipment to be attached with the main manufacturing machine. The equipment will need an initial investment of OMR 52800. The useful life of the equipment is 6 years. After 6 years it will have no salvage value. The cost of capital is 9% Earning before Depreciation and Tax are as follows Earnings Before Depreciation and Tax (OMR) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 16000 15000 17400 19800 22200 28600 Depreciation is calculated on a straight line method and the tax rate is 25%. Evaluate the Project on the basis of NPV and choose the option below? NPV is 34450 and the project can be accepted O NPV is 21755 and the project can be accepted NPV is negative and the project can be rejected NPV is 20755 and the project can be accepted

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Audit Process Principles Practice And Cases

Authors: Stuart Manson, Iain Gray, Louise Crawford

6th Edition

1408081709, 978-1408081709

More Books

Students also viewed these Accounting questions