Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its estimated useful life is five years without scrap value. The old car has a book value of P15,000 and can be sold at P12,000. The acquisition of the new car will yield annual cash savings of P30,000 before income tax. Income tax rate is 25%. What is the discounted payback period using the IRR?

Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its estimated useful life is five years without scrap value. The old car has a book value of P15,000 and can be sold at P12,000. The acquisition of the new car will yield annual cash savings of P30,000 before income tax. Income tax rate is 25%. What is the discounted payback period using the IRR?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 8P

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