An old machine costing P 50,000 will be traded in for a new machine costing P 120,000 inclusive of freight charges of P 1,200. The trade in value of the old machine is P 7,000. If the new machine is acquired, overhauling costs of P 6,000 can be avoided. Income taxes are 40%. Additional working capital of P 10,000 will be needed to support the planned operation of the new machine. What is the net investment for decision making purposes? P 107,000 P 117,000 P 119,400 P 120,600
An old machine costing P 50,000 will be traded in for a new machine costing P 120,000 inclusive of freight charges of P 1,200. The trade in value of the old machine is P 7,000. If the new machine is acquired, overhauling costs of P 6,000 can be avoided. Income taxes are 40%. Additional working capital of P 10,000 will be needed to support the planned operation of the new machine. What is the net investment for decision making purposes? P 107,000 P 117,000 P 119,400 P 120,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- An old machine costing P 50,000 will be traded in for a new machine costing P 120,000 inclusive of freight charges of P 1,200. The trade in value of the old machine is P 7,000. If the new machine is acquired, overhauling costs of P 6,000 can be avoided. Income taxes are 40%. Additional
working capital of P 10,000 will be needed to support the planned operation of the new machine.
What is the net investment for decision making purposes?
P 107,000
P 117,000
P 119,400
P 120,600
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