What is the net present value

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Question - Cansel Toeny Corporation is planning to buy a new equipment costing P600,000. The equipment will be depreciated using the straight-line method over a period of 5 years. It is expected to have a salvage value of P10,000 at the end of its life. The equipment will produce annual cash flows from operations, net of income taxes, of P180,000 per year. The income tax rate is 32%. The company's hurdle rate is 12%. What is the net present value?

a. P48,900

b. P84,950

c. P54,570

d. P654,570

Reference no: EM133115163

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