nky Company plans to buy a new machine to increase its plant's productive capacity. The new machine's estimated installed cost is P 50,000. It is expected to have no salvage value at the end of its useful life of 5 years. Based on Pinky's projections, the new machine can produce 100,000 units of product per year. Because of the high demand for this product for which thr company sells at L5 each (cash), it is expected that all units produced will be sold. Relevant production, selling and administrative costs related to the product amount to P3 each, exclusive of depreciation. The company pays income tax at rate of 30% of taxable income. Required: a Accounting net income from the new machine. b. The net cash inflow
nky Company plans to buy a new machine to increase its plant's productive capacity. The new machine's estimated installed cost is P 50,000. It is expected to have no salvage value at the end of its useful life of 5 years. Based on Pinky's projections, the new machine can produce 100,000 units of product per year. Because of the high demand for this product for which thr company sells at L5 each (cash), it is expected that all units produced will be sold. Relevant production, selling and administrative costs related to the product amount to P3 each, exclusive of depreciation. The company pays income tax at rate of 30% of taxable income. Required: a Accounting net income from the new machine. b. The net cash inflow
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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Pinky Company plans to buy a new machine to increase its plant's productive capacity. The new machine's estimated installed cost is P 50,000. It is expected to have no salvage value at the end of its useful life of 5 years. Based on Pinky's projections, the new machine can produce 100,000 units of product per year. Because of the high demand for this product for which thr company sells at L5 each (cash), it is expected that all units produced will be sold. Relevant production, selling and administrative costs related to the product amount to P3 each, exclusive of depreciation. The company pays income tax at rate of 30% of taxable income.
Required:
a Accounting net income from the new machine.
b. The net cash inflows from the project.
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