Question
VWX Ltd. is considering the purchase of new machines to enhance production capabilities. The relevant financial details are outlined below. Assume a corporate tax rate
VWX Ltd. is considering the purchase of new machines to enhance production capabilities. The relevant financial details are outlined below. Assume a corporate tax rate of 34% and a capital interest rate of 8%.
Particulars | Machine 1 (Rs) | Machine 2 (Rs) | Machine 3 (Rs) |
Initial Investment | 12,00,000 | 13,00,000 | 14,00,000 |
Estimated Annual Sales | 15,00,000 | 16,00,000 | 17,00,000 |
Cost of Production: | |||
Direct Material | 1,40,000 | 1,50,000 | 1,60,000 |
Direct Labour | 1,50,000 | 1,60,000 | 1,70,000 |
Factory Overhead | 1,70,000 | 1,80,000 | 1,90,000 |
Administration Cost | 70,000 | 75,000 | 80,000 |
Selling & Distribution Cost | 60,000 | 65,000 | 70,000 |
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
