A company is trying to diversify its business in a new product line. The life of the project is 10 years with no salvage value at the end of its life. The initial outlay of the project is P20,000,000. The annual net profit is P 3,500,000. Find the rate of return for the new business
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
A company is trying to diversify its business in a new product line. The life of the project is 10 years with no salvage value at the end of its
life. The initial outlay of the project is P20,000,000. The annual net profit is P 3,500,000. Find the
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
