The Molding Department of the Cabuyao, Inc. has been investigating the possibility of acquiring a new unit of equipment at a cost of P120,000. Cash cost savings before income tax from the use of this equipment has been estimated at P50,000 a year for a period of 4 years. At the end of 4 years, the equipment will have no salvage value. The minimum acceptable rate is 12% discounted rate. REQUIRED: 1. Calculate the NPV under straight-line under straight-line depreciation. 2. Calculate the NPV under SYD depreciation. 3. Explain how a bookkeeping method can help to improve the rating of a capital investment project.

The Molding Department of the Cabuyao, Inc. has been investigating the possibility of acquiring a new unit of equipment at a cost of P120,000. Cash cost savings before income tax from the use of this equipment has been estimated at P50,000 a year for a period of 4 years. At the end of 4 years, the equipment will have no salvage value. The minimum acceptable rate is 12% discounted rate. REQUIRED: 1. Calculate the NPV under straight-line under straight-line depreciation. 2. Calculate the NPV under SYD depreciation. 3. Explain how a bookkeeping method can help to improve the rating of a capital investment project.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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