NUBD Co. is planning to acquire a new machine at a total cost of P360,000. The estimated life of the machine is 6 years with no salvage value. The straight-line method of depreciation will be used. NUBD estimates that the annual cash flow from operations, before income taxes, from using this machine amounts to P90,000. Assume that NUBD’s cost of capital is 7% and the income tax rate is 40%. (Use 3 decimal places for the PV factors)What would be the net present value?

NUBD Co. is planning to acquire a new machine at a total cost of P360,000. The estimated life of the machine is 6 years with no salvage value. The straight-line method of depreciation will be used. NUBD estimates that the annual cash flow from operations, before income taxes, from using this machine amounts to P90,000. Assume that NUBD’s cost of capital is 7% and the income tax rate is 40%. (Use 3 decimal places for the PV factors)What would be the net present value?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

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