1. Papa Stationery's current photocopy machine was purchased two years ago at RM50,000. The owner, Mr Karrem, is now considering buying a new machine that can make copies twice as fast as the existing machine. This new machine can be purchased for RM 80,000 and would be depreciated straight line over 8 years, after which it would have no salvage value. Mr Kareem expects that the new machine will produce EBITDA of RM50,000 per year for the next eight years while the existing machine produces EBITDA of only RM35,000 per year. The current machine is being depreciated straight line over its useful life of 10 years after which it will have no salvage value. All other operating expenses are identical for both machines. The existing machine can be sold to another shop now for RM30,000. The Papa Stationery's tax rate is 35%. C. What is the incremental after-tax cash flow that the Papa Stationery will receive from selling the existing machine (old)? D. If the Papa Stationery's opportunity cost of capital is 12%, then what is the NPV for upgrading to the new machine?

1. Papa Stationery's current photocopy machine was purchased two years ago at RM50,000. The owner, Mr Karrem, is now considering buying a new machine that can make copies twice as fast as the existing machine. This new machine can be purchased for RM 80,000 and would be depreciated straight line over 8 years, after which it would have no salvage value. Mr Kareem expects that the new machine will produce EBITDA of RM50,000 per year for the next eight years while the existing machine produces EBITDA of only RM35,000 per year. The current machine is being depreciated straight line over its useful life of 10 years after which it will have no salvage value. All other operating expenses are identical for both machines. The existing machine can be sold to another shop now for RM30,000. The Papa Stationery's tax rate is 35%. C. What is the incremental after-tax cash flow that the Papa Stationery will receive from selling the existing machine (old)? D. If the Papa Stationery's opportunity cost of capital is 12%, then what is the NPV for upgrading to the new machine?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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7:27 f t < Session[1].docx - Word ✓ Qo 138 - 21 Paragraph O References Mailings Review View Help BLUEBEAM One day you're going to miss my boring texts ## TO Accessibility: Investigate Search Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year hoher webb ng Normal ||| No Spacing Styles Acrobat 2021 $ 980,000 3,020,000 1,000,000 648,000 Go to website O Heading 1 √ Calculate the amount will be reported for accounts receivable on the statement of financial position at December 31, 2022. 3. Accounts Receivable on the Statement of Financial Position at December 31, 2022 for Newton Corp.: Accounts Receivable is calculated as the cumulative billings to date minus the cumulative cash collected: Accounts Receivable at December 31, 2022 = Cumulative Billings- Cumulative Cash Collected Accounts Receivable at December 31, 2022 = ($1,000,000+ $1,000,000) - ($648,000+ $1,280,000) = $2,000,000 - $1,928,000 = $72,000 Therefore, the amount reported…
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