Win Corporation is considering replacing a machine with a book value of P400,000, a remaining useful life of 5 years, and annual straight-line depreciation of P80,000. The existing machine has a current market value of P400,000. The replacement machine would cost P550,000, have a 5- year life, and save P75,000 per year in cash operating costs. If the replacement machine would be depreciated using the straight-line method and the tax rate is 40%, what would be the net investment required to replace the existing machine? * O P90,000 P150,000 P330,000 P550,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Win Corporation is considering replacing a machine with a book value of
P400,000, a remaining useful life of 5 years, and annual straight-line
depreciation of P80,000. The existing machine has a current market value
of P400,000. The replacement machine would cost P550,000, have a 5-
year life, and save P75,000 per year in cash operating costs. If the
replacement machine would be depreciated using the straight-line method
and the tax rate is 40%, what would be the net investment required to
replace the existing machine? *
O P90,000
P150,000
P330,000
P550,000
Transcribed Image Text:Win Corporation is considering replacing a machine with a book value of P400,000, a remaining useful life of 5 years, and annual straight-line depreciation of P80,000. The existing machine has a current market value of P400,000. The replacement machine would cost P550,000, have a 5- year life, and save P75,000 per year in cash operating costs. If the replacement machine would be depreciated using the straight-line method and the tax rate is 40%, what would be the net investment required to replace the existing machine? * O P90,000 P150,000 P330,000 P550,000
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