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

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4BE: Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of...

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Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of 115,000 for nine years. Determine the internal rate of return for this project, using the present value of an annuity table appearing in Exhibit 5 of this chapter.
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