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XYZ company is planning to invest in machine worth P300,000 with a scrap value ofP40,000 after 5 years.It is expected to generate a net income
XYZ company is planning to invest in machine worth P300,000 with a scrap value ofP40,000 after 5 years.It is expected to generate a net income before taxes of P80,000 a year with an income tax rate of 30%.The cost of capital is 10%
Required:
1. Compute for the annual cash return
2. What is the payback period?
3. What is the net present value?
4.Using the payback period method in evaluating the project, will the company invest or not?Why?
5. If the present value method is used, what would be your recommendation.
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