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Analyzing the acquisition of the new press

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Reference no: EM132971472

Question - Diliman Republic Publishers, Inc. is considering replacing an old press that cost P800,000 six years ago with a new one that would cost P2,250,000. Shipping and installation would cost an additional P200,000. The old press has a book value of P150,000 and could be sold currently for P50,000. The increased production of the new press would increase inventories by P40,000, accounts receivable by P160,000 and accounts payable by P140,000. Diliman Republic's net initial investment for analyzing the acquisition of the new press assuming a 35% income tax rate would be?

a. P2,425,000

b. P2,600,000

c. P2,450,000

d. P2,250,000

Reference no: EM132971472

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