Question
UVW Enterprises is evaluating two new machines for purchase. The companys cost of capital is 15% and tax rate is 31%. Other information related to
UVW Enterprises is evaluating two new machines for purchase. The company’s cost of capital is 15% and tax rate is 31%. Other information related to both machines are as follows:
Particulars | Machine E | Machine F |
Cost of machine | 1,800,000 | 2,200,000 |
Expected life | 6 years | 6 years |
Annual Income (before Tax & depreciation) | 900,000 | 1,100,000 |
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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Financial Accounting For Executives And MBAs
Authors: Wallace, Simko, Ferris
4th Edition
1618531980, 9781618531988
