January 1, 2021, NUBD Co. purchased a new machine for P100,000 with an estimated useful life of five years and no salvage value. For book and tax purposes, the machine will be depreciated using the straight-line method an it is expected to produce annual cash flow from operations, before income taxes, of P45,000. Assume that NUBD uses a time-adjusted rate of 12% and that its income tax rate will be 40% for all years. The net present value of the machine should be:(Use 3 decimal places for the PV factors)

January 1, 2021, NUBD Co. purchased a new machine for P100,000 with an estimated useful life of five years and no salvage value. For book and tax purposes, the machine will be depreciated using the straight-line method an it is expected to produce annual cash flow from operations, before income taxes, of P45,000. Assume that NUBD uses a time-adjusted rate of 12% and that its income tax rate will be 40% for all years. The net present value of the machine should be:(Use 3 decimal places for the PV factors)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 6CE

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