Solution-How many years can be recovered

How many years can be recovered

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Reference no: EM132826751

A machine is being replaced with a new one and the following information is given:

Cost of new machine P90,000

Increase in working capital requirement 10,000

Net proceeds from sale of old machine, including tax benefit on loss 25,000

Cost of immediate repairs on old machine, net of tax effect 6,000

Incremental annual cash returns (for 8 years) arising from replacement 23,000

Problem 1. How much is the net investment?

Problem 2. In how many years can it be recovered?

Problem 3. With a cost of money equal to 15%, how much should be the net present value from the replacement?

Reference no: EM132826751

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How many years can be recovered

Reference no: EM132826751

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