This question is based on the following in formation: An investment is Machinery costing P 250,000 with a 4-year life and no salvage value is expected to produce the following net income after taxes of 30%: End of year 1 P 17,000 2 22,000 3 25,000 4 26,000 How much is the annual tax shield? How much is the annual tax shield? A. P 17,580 B. P 17,850 C. P 18,570 D. P 18,750 What is the ROI (using the cash income)? A. 6.3% B. 9% C. 31.3% D. 34%

This question is based on the following in formation: An investment is Machinery costing P 250,000 with a 4-year life and no salvage value is expected to produce the following net income after taxes of 30%: End of year 1 P 17,000 2 22,000 3 25,000 4 26,000 How much is the annual tax shield? How much is the annual tax shield? A. P 17,580 B. P 17,850 C. P 18,570 D. P 18,750 What is the ROI (using the cash income)? A. 6.3% B. 9% C. 31.3% D. 34%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 2P

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