XMohan & Co. is considering the purchase of machine. Two machines X and Y each Costing Rs.50, 000 are available. Earnings after taxes before depreciation are expected to be as under: Year 1 2 3 4 5 Machine 'X' 15000 20000 25000 15000 10000 (Rs.) Machine 'Y' (Rs.) 5000 15000 20000 30000 20000 Estimate the two alternatives according to: (a) Payback method, and (b) NPV method a discount rate of 10% is to be used.
XMohan & Co. is considering the purchase of machine. Two machines X and Y each Costing Rs.50, 000 are available. Earnings after taxes before depreciation are expected to be as under: Year 1 2 3 4 5 Machine 'X' 15000 20000 25000 15000 10000 (Rs.) Machine 'Y' (Rs.) 5000 15000 20000 30000 20000 Estimate the two alternatives according to: (a) Payback method, and (b) NPV method a discount rate of 10% is to be used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
XMohan & Co. is considering the purchase of machine.
Two machines X and Y each Costing Rs.50, 000 are
available. Earnings after taxes before depreciation are
expected to be as under:
Year
1
2
3
4
5
Machine 'X'
15000
20000
25000
15000
10000
(Rs.)
Machine 'Y' (Rs.)
5000
15000
20000
30000
20000
Estimate the two alternatives according to:
(a) Payback method, and
(b) NPV method a discount rate of 10% is to be used.
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