Old Machine Machine TKC Machine RMR Revenue: Annual Sales RM 500,000 RM 600,000 RM 675,000 Expenses: Annual cost of defects 80,000 76,000 77,600 Annual operating cost 50,000 51,250 52,000 Annual maintenance cost 40,000 39,400 40,800 Annnual depreciation 42,600 33,400 Pretax income 330,000 390,750 471,200 Income tax 132,000 156,300 188,480 Net Income 198,000 234,450 282,720 Add: depreciation 42,600 33,400 Add: disposal of old machine 5,000 5,000 Annual net cash flow RM 198,000 RM 282,050 RM 321,120
Old Machine Machine TKC Machine RMR Revenue: Annual Sales RM 500,000 RM 600,000 RM 675,000 Expenses: Annual cost of defects 80,000 76,000 77,600 Annual operating cost 50,000 51,250 52,000 Annual maintenance cost 40,000 39,400 40,800 Annnual depreciation 42,600 33,400 Pretax income 330,000 390,750 471,200 Income tax 132,000 156,300 188,480 Net Income 198,000 234,450 282,720 Add: depreciation 42,600 33,400 Add: disposal of old machine 5,000 5,000 Annual net cash flow RM 198,000 RM 282,050 RM 321,120
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
Related questions
Question
Assume that the company’s cost of capital and tax rate is 10% and 40% respectively. From the
replacement plan, calculate:
i)
Transcribed Image Text:Computation of Cash flow after tax
Particulars
old Machine Machine TKC
Machine RMR
(RM)
(RM)
(RM)
Annual Revenue
500000
600000
675000
Annual Cost of defects
80000
76000
77600
Annual Operating cost
50000
51250
52000
Annual Maintenance cost ##
40000
39400
40800
Net Amount
330000
433350
504600
Less: Depreciation
42600
32400
Earning before Tax (EBT)
390750
472200
Таx @ 40%
156300
188880
Earning after Tax (EAT)
234450
283320
Cash flow after tax= EAT+ Depreciation
277050
315720
## Given : Quarterly Maintenance Cost
RM 10000
So, Annual Maintenance Cost
RM 10000 x4
RM 40000
Transcribed Image Text:Old Machine Machine TKC Machine RMR
Revenue:
Annual Sales
RM 500,000 RM 600,000 RM 675,000
Expenses:
Annual cost of defects
80,000
76,000
77,600
Annual operating cost
50,000
51,250
52,000
Annual maintenance cost
40,000
39,400
40,800
Annnual depreciation
42,600
33,400
Pretax income
330,000
390,750
471,200
Income tax
132,000
156,300
188,480
Net Income
198,000
234,450
282,720
Add: depreciation
42,600
33,400
Add: disposal of old machine
5,000
5,000
Annual net cash flow
RM 198,000 RM 282,050 RM 321,120
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