Yoyo, Inc. is considering the purchase of a new machine that will reduce manufacturingcosts by P15,000 annually. Yoyo will use MACRS to depreciate the machine, and it expectsto sell the machine at the end of its 5-year operating life for P10,000. The firm expects to beable to reduce net operating working capital by P15,000 when the machine is installed, butrequired operating working will reduce to its original level when the machine is sold after 5years. Yoyo's tax rate is 30% and it uses 12% cost of capital. The applicable depreciationrates are 20%, 19%, 12%, 11%, and 6%. If the machine costs P60,000,a. What is the project's NPVb. What is the project's MIRR

Machine Cost = P 60,000 Working Capital Reduction = P 15,000 Net cash outflow = Machine cost -…

Answered: Yoyo, Inc. is considering the purchase…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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