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Two alternative machines (A and B) have been suggested each costing 4,50,000. C. Flow After Tax (CFAT) are expected to be as follows : Cash Flow After Tax Year Machine A () Machine B () 1 40,000 1,20,000 1,20,000 1,60,000 3 1,60,000 2,00,000 100 0 0

Two alternative machines (A and B) have been suggested each costing 4,50,000. C. Flow After Tax (CFAT) are expected to be as follows : Cash Flow After Tax Year Machine A () Machine B () 1 40,000 1,20,000 1,20,000 1,60,000 3 1,60,000 2,00,000 100 0 0

Essentials Of Investments
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
Section: Chapter Questions
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Two alternative machines (A and B) have been suggested each costing 4,50,000. Cash Question. 2. The XYZ Co. Ltd. is considering the purchase of a new machine. Flow After Tax (CFAT) are expected to be as follows : Cash Flow After Tax Year Machine A (7) Machine B (7) 1 40,000 1,20,000 1,20,000 1,60,000 1,60,000 2,00,000 4 2,40,000 1,20,000 1,60,000 80,000 The company has a target of return on capital of 10 percent and on this basis you are required to compare the profitability of the machines and state which alternative you consider financially perferable. 23
Transcribed Image Text:Two alternative machines (A and B) have been suggested each costing 4,50,000. Cash Question. 2. The XYZ Co. Ltd. is considering the purchase of a new machine. Flow After Tax (CFAT) are expected to be as follows : Cash Flow After Tax Year Machine A (7) Machine B (7) 1 40,000 1,20,000 1,20,000 1,60,000 1,60,000 2,00,000 4 2,40,000 1,20,000 1,60,000 80,000 The company has a target of return on capital of 10 percent and on this basis you are required to compare the profitability of the machines and state which alternative you consider financially perferable. 23
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