Old Machine Machine TKC Machine RMR Revenue: Annual Sales RM 500,000 RM 600,000 RM 675,000 Expenses: Annual cost of defects 80,000 76,000 77,600 Annual operating cost 50,000 51,250 52,000 Annual maintenance cost 40,000 39,400 40,800 Annnual depreciation 42,600 33,400 Pretax income 330,000 390,750 471,200 Income tax 132,000 156,300 188,480 Net Income 198,000 234,450 282,720 Add: depreciation 42,600 33,400 Add: disposal of old machine 5,000 5,000 Annual net cash flow RM 198,000 RM 282,050 RM 321,120
Old Machine Machine TKC Machine RMR Revenue: Annual Sales RM 500,000 RM 600,000 RM 675,000 Expenses: Annual cost of defects 80,000 76,000 77,600 Annual operating cost 50,000 51,250 52,000 Annual maintenance cost 40,000 39,400 40,800 Annnual depreciation 42,600 33,400 Pretax income 330,000 390,750 471,200 Income tax 132,000 156,300 188,480 Net Income 198,000 234,450 282,720 Add: depreciation 42,600 33,400 Add: disposal of old machine 5,000 5,000 Annual net cash flow RM 198,000 RM 282,050 RM 321,120
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 40P
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Question
Assume that the company’s cost of capital and tax rate is 10% and 40% respectively. From the
replacement plan, calculate:
i)
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