Q1. ARR Tulsian Ltd. provides you the following information: 1. Purchase Price of each Machine 1. Working Capital 3. Useful Life of each machine 4. Estimated Salvage Value at the end of useful life 5. Method of Depreciation 6. Tax Rate Rs. 6,00,000 Rs. 3,00,000 5 years Rs. 1,00,000 Straight line 30% 7. Earning before depreciation & tax: Machine Year 1 Year 2 Year 3 Year 4 Year 5 Machine X Machine Y Machine Z 3,00,000 3,00,000 1,00,000 4,00,000 Required: Suggest which of the above machinee abo 3,00,000 2,00,000 3,00,000 3,00,000 3,00,000 2,00,000 3,00,000 12,00,000 5,00,000 Rate of Return dnskad You are required to suggest which of the three machines should the company go for on the basis of : A. ARR method B. Payback period method

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
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Q1.
ARR Tulsian Ltd. provides you the following information:
1. Purchase Price of each Machine
1. Working Capital
3. Useful Life of each machine
4. Estimated Salvage Value at the end of useful life
5. Method of Depreciation
6. Tax Rate
7. Earning before depreciation & tax:
Rs. 6,00,000
Rs. 3,00,000
5 years
Rs. 1,00,000
Straight line
30%
M
Machine
Year 1
Year 2
Year 3
Year 4
Year 5
Machine X
3,00,000
3,00,000
1,00,000
4,00,000
Required: Suggest which of the above machines aboutt
3,00,000
2,00,000
3,00,000
3,00,000
3,00,000
2,00,000
Machine Y
Machine Z
3,00,000
12,00,000
5,00,000
Rate of Return Moshad
You are required to suggest which of the three machines should the company go for on
the basis of :
A. ARR method
B. Payback period method
Transcribed Image Text:Q1. ARR Tulsian Ltd. provides you the following information: 1. Purchase Price of each Machine 1. Working Capital 3. Useful Life of each machine 4. Estimated Salvage Value at the end of useful life 5. Method of Depreciation 6. Tax Rate 7. Earning before depreciation & tax: Rs. 6,00,000 Rs. 3,00,000 5 years Rs. 1,00,000 Straight line 30% M Machine Year 1 Year 2 Year 3 Year 4 Year 5 Machine X 3,00,000 3,00,000 1,00,000 4,00,000 Required: Suggest which of the above machines aboutt 3,00,000 2,00,000 3,00,000 3,00,000 3,00,000 2,00,000 Machine Y Machine Z 3,00,000 12,00,000 5,00,000 Rate of Return Moshad You are required to suggest which of the three machines should the company go for on the basis of : A. ARR method B. Payback period method
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