What is the bail-out period for this project in years? NUBD Co. plans to invest in a duplicating machine that costs P120,000. The followingare the expected annual cash inflows that are evenly received each month and theestimated salvage value at any point of each year.Cash inflowsP40,00036,00032,00028,00025,000Salvage valueP50,00040,00027,00020,0005,000Year124

In Accounting Bail-out method shows the length of time required to repay the total initial…

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What is the bail-out period for this project in years?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

What is the bail-out period for this project in years?

NUBD Co. plans to invest in a duplicating machine that costs P120,000. The following
are the expected annual cash inflows that are evenly received each month and the
estimated salvage value at any point of each year.
Cash inflows
P40,000
36,000
32,000
28,000
25,000
Salvage value
P50,000
40,000
27,000
20,000
5,000
Year
1
2
4

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