The following are futuro cash flows projected for an item of machinery (1) $200,000 to be incurred in three years tim e which will extend the life of the machine by a further five years (2)$55.000 annual revenue from products produced by the machine (2) $6,000 of finance costs on a bank loan taken out to purchase the machine (4) $60,000 maintenance costs to be incurred in 12 months time Which of the above cash flows are relevant to the calculation of the machines value in use
The following are futuro cash flows projected for an item of machinery (1) $200,000 to be incurred in three years tim e which will extend the life of the machine by a further five years (2)$55.000 annual revenue from products produced by the machine (2) $6,000 of finance costs on a bank loan taken out to purchase the machine (4) $60,000 maintenance costs to be incurred in 12 months time Which of the above cash flows are relevant to the calculation of the machines value in use
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following are futuro cash flows projected for an item of machinery
(1) $200,000 to be incurred in three years tim
e which will extend the life of the machine by a further five years
(2)$55.000 annual revenue from products produced by the machine
(2) $6,000 of finance costs on a bank loan taken out to purchase the machine
(4) $60,000 maintenance costs to be incurred in 12 months time
Which of the above cash flows are relevant to the calculation of the machines value in use
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