A company is considering to acquire a new machinery. It costs ₱90,000 with transportation costs of 6,000 and 9,000 installation costs. The machinery has a useful life of 10 years. Over its life, it is expected to produce 2,000 units with a selling price of 500 and a prime cost of 450 per unit. Federal tax regulations permits machine of this type to be depreciated using the straight-line method over 5 years with no estimated salvage value. Marginal tax rate is 40%. What is the net cash outflow that should be used in capital investment analysis? What is the net cash flow (cash inflows) for five years that should be used in capital investment analysis?
A company is considering to acquire a new machinery. It costs ₱90,000 with transportation costs of 6,000 and 9,000 installation costs. The machinery has a useful life of 10 years. Over its life, it is expected to produce 2,000 units with a selling price of 500 and a prime cost of 450 per unit. Federal tax regulations permits machine of this type to be depreciated using the straight-line method over 5 years with no estimated salvage value. Marginal tax rate is 40%. What is the net cash outflow that should be used in capital investment analysis? What is the net cash flow (cash inflows) for five years that should be used in capital investment analysis?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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A company is considering to acquire a new machinery. It costs ₱90,000 with transportation costs of 6,000 and 9,000 installation costs. The machinery has a useful life of 10 years. Over its life, it is expected to produce 2,000 units with a selling price of 500 and a prime cost of 450 per unit. Federal tax regulations permits machine of this type to be
What is the net cash outflow that should be used in capital investment analysis?
What is the net cash flow (cash inflows ) for five years that should be used in capital investment analysis?
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