26. The following data pertain to Sunlight Corp., whose management is planning to purchase an automated tanning equipment. 1. Economic life of equipment - 8 years. 2. Disposal value after 8 years – nil. 3. Estimated net annual cash inflows for each of the 8 years - P81,000. || | 4. Time-adjusted internal rate of return – 14% 5. Cost of capital of Sunlight Corp - 16% 6. The table of present values of P1 received annually for 8 years has these factors: at 14% = 4.639, at 16% = 4.344 7. Depreciation is approximately P46,970 annually. %3D
26. The following data pertain to Sunlight Corp., whose management is planning to purchase an automated tanning equipment. 1. Economic life of equipment - 8 years. 2. Disposal value after 8 years – nil. 3. Estimated net annual cash inflows for each of the 8 years - P81,000. || | 4. Time-adjusted internal rate of return – 14% 5. Cost of capital of Sunlight Corp - 16% 6. The table of present values of P1 received annually for 8 years has these factors: at 14% = 4.639, at 16% = 4.344 7. Depreciation is approximately P46,970 annually. %3D
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:114
115 14
26. The following data pertain to Sunlight Corp., whose management is planning to
purchase an automated tanning equipment.
1. Economic life of equipment - 8 years.
2. Disposal value after 8 years - nil.
3. Estimated net annual cash inflows for each of the 8 years - P81,000.
4. Time-adjusted internal rate of return- 14%
5. Cost of capital of Sunlight Corp-
6. The table of present values of P1 received annually for 8 years has these
factors: at 14% = 4.639, at 16% = 4.344
16%
7. Depreciation is approximately P46,970 annually.
Find the required increase in annual cash inflows in order to have the time-adjusted
rate of return approximately equal the cost of capital.
Group of answer choices
P5 501
P4.344
P5,871
P6,501
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