Rogue Corporation is planning to replace an old machine. The annual cost of operating the old machinery is P138,600 excluding depreciation, while the estimate for the new machinery is P91,300. The cost of the new machinery is P160,000,net of the trade in allowance, with an estimated useful life of 8 years, no salvage value. The effective income tax rate is 40% and the cost of capital is 8%. The old machinery has a annual depreciation of P15,000 while the new machinery is estimated to have an annual depreciation of P20,000. The book value of the old machine is zero. Compute for the internal rate of return of the investment. Use 3 decimal places for PV factors.

Rogue Corporation is planning to replace an old machine. The annual cost of operating the old machinery is P138,600 excluding depreciation, while the estimate for the new machinery is P91,300. The cost of the new machinery is P160,000,net of the trade in allowance, with an estimated useful life of 8 years, no salvage value. The effective income tax rate is 40% and the cost of capital is 8%. The old machinery has a annual depreciation of P15,000 while the new machinery is estimated to have an annual depreciation of P20,000. The book value of the old machine is zero. Compute for the internal rate of return of the investment. Use 3 decimal places for PV factors.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

REMOVE PERCENTAGE SIGN PRESENT 33.333333% AS 33.33

Rogue Corporation is planning to replace an old machine. The annual cost of operating the old
machinery is P138,600 excluding depreciation, while the estimate for the new machinery is
P91,300. The cost of the new machinery is P160,000,net of the trade in allowance, with an
estimated useful life of 8 years, no salvage value. The effective income tax rate is 40% and the
cost of capital is 8%. The old machinery has a annual depreciation of P15,000 while the new
machinery is estimated to have an annual depreciation of P20,000. The book value of the old
machine is zero. Compute for the internal rate of return of the investment. Use 3 decimal places
for PV factors.

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