Determine the apr on original investment

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Case 1 - DEF Company is considering the manufacture of a new product which will require an investment of P10,000,000, scrap value of P200,000 and with a useful life of 10 years depreciated using double- declining depreciation. Annual net cash inflow before tax is P2.500,000 with income tax rate of 30%.

1. Determine the Annual depreciation from year 1 to year 10.

2. Determine the Annual net income from year 1 to year 10.

3. Determine the APR on original investment.

4. Determine the APR on average investment.

Case 2 - An equipment costing P80,000 will produce consistent annual net cash inflows, net of tax, of P22,000. Its useful life is 6 years with no salvage value. The straight line method of depreciation is used. Acceptable minimum rate of return is 10%.

5. Determine the net present value.

6. Determine the profitability index.

7. Determine the NPV index.

Reference no: EM133069497

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