Bonus Corporation is installing a new machine at its production facility. It has incurred these costs: Purchase price (including input tax of P300,000)P2,800,000Initial delivery and handling costs200,000Costs of site preparation600,000Consultants used for advice on the acquisition of the machine700,000Installation and assembly costs500,000Costs of testing100,000Costs of training employees on how to use the machine80,000Estimated dismantling costs to be incurred after 7 years300,000Operating losses before commercial production400,000 The cost of the machine is A. 4,900,000B. 5,200,000C. 4,200,000D. 4,980,000

Net Purchase price = Purchase price - input tax = 2800000-300000 = P2,500000

Answered: Bonus Corporation is installing a new…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 4PROB

See similar textbooks

Related questions

Question

Bonus Corporation is installing a new machine at its production facility. It has incurred these costs:

Purchase price (including input tax of P300,000)	P2,800,000
Initial delivery and handling costs	200,000
Costs of site preparation	600,000
Consultants used for advice on the acquisition of the machine	700,000
Installation and assembly costs	500,000
Costs of testing	100,000
Costs of training employees on how to use the machine	80,000
Estimated dismantling costs to be incurred after 7 years	300,000
Operating losses before commercial production	400,000

The cost of the machine is

A. 4,900,000

B. 5,200,000

C. 4,200,000

D. 4,980,000

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions