Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its estimated useful life is five years without scrap value. The old car has a book value of P15,000 and can be sold at P12,000. The acquisition of the new car will yield annual cash savings of P20,000 before income tax. Income tax rate is 25%. (M)The net investment of the new car is A. P108,000 B. P108,750 C. P107,250 D. P107,000
Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its estimated useful life is five years without scrap value. The old car has a book value of P15,000 and can be sold at P12,000. The acquisition of the new car will yield annual cash savings of P20,000 before income tax. Income tax rate is 25%. (M)The net investment of the new car is A. P108,000 B. P108,750 C. P107,250 D. P107,000
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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Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its estimated useful life is five years without scrap value. The old car has a book value of P15,000 and can be sold at P12,000. The acquisition of the new car will yield annual cash savings of P20,000 before income tax. Income tax rate is 25%. (M)The net investment of the new car is
A. P108,000
B. P108,750
C. P107,250
D. P107,000
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