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What will be the bailout period for the new machine

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Reference no: EM132624785

Problem 1: Cordevilla Company purchased a new machine on January 1 of this year for P140,000 with an estimated useful life of 5 years and a salvage value of P10,000. The machine will be depreciated using the straight line method. The machine is expected to produce cash from operations net of income taxes of P36,000 a year in each of the next 5 years. The new machine's salvage value is P20,000 in years 1 and 2 and P15,000 in years 3 and 4. What will be the bailout period for this new machine?

a. 1.4 years

b. 1.9 years

c. 2.47 years

d. 3.89 years

Reference no: EM132624785

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