NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new machine would cost P90,000, have a five year life, and no salvage value. Variable operating costs would be P100,000 per year. The present machine has a book value of P50,000, a remaining life of five years and disposal value now of P5,000. Variable operating costs would be P125,000 per year. Ignoring present value calculations and income taxes, and considering five years in total, what would be the increase (decrease) in profit before income taxes by acquiring the new machine as opposed to retaining the present one? *

NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new machine would cost P90,000, have a five year life, and no salvage value. Variable operating costs would be P100,000 per year. The present machine has a book value of P50,000, a remaining life of five years and disposal value now of P5,000. Variable operating costs would be P125,000 per year. Ignoring present value calculations and income taxes, and considering five years in total, what would be the increase (decrease) in profit before income taxes by acquiring the new machine as opposed to retaining the present one? *

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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47
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