The DDB Corporation wants to purchase a new machine for its factory operations at a cost of P 800,000. The investment is
Posted: Sun Jun 05, 2022 5:14 pm
The DDB Corporation wants to purchase a new machine for its
factory operations at a cost of P 800,000. The investment is
expected to generate P 400,000 in annual cash flows for a period of
five years. The required rate of return is 10%. The old machine can
be sold for P 75,000. The machine is expected to have zero value at
the end of the five-year period. Disregard income taxes and
depreciation. Compute for net present value of the investment.
(Refer to Present Value Table Annuity for the annual cash flows on
the other hand use the Present Value Table Ordinary Annuity for the
Scrap Value of the old machine).
factory operations at a cost of P 800,000. The investment is
expected to generate P 400,000 in annual cash flows for a period of
five years. The required rate of return is 10%. The old machine can
be sold for P 75,000. The machine is expected to have zero value at
the end of the five-year period. Disregard income taxes and
depreciation. Compute for net present value of the investment.
(Refer to Present Value Table Annuity for the annual cash flows on
the other hand use the Present Value Table Ordinary Annuity for the
Scrap Value of the old machine).