For computation use PVF rounded to three decimal places. Audi Company is considering purchasing an asset for P60,000 that would have a useful life of 5years and would have a useful life of 5 years and would have a salvage value of P7,000. For taxpurposes, the entire original cost of the assets would be depreciated over 5 years using thestraight-line method and the salvage value would be ignored. The asset would generate annualnet cash inflows of P27,000 throughout its useful life. The project would require additionalworking capital of P1,000, which would be released at the end of the project. The Audi Company'stax rate is 30% and its discount rate is 10%. What is the net present value for the asset?

Net present value is the difference between the present value of cash flow and initial investment…

ears and would have a useful life of 5 years and would have a salvage value of P7,000. For tax purposes, the entire original cost of the assets would be depreciated over 5 years using the traight-line method and the salvage value would be ignored. The asset would generate annual et cash inflows of P27,000 throughout its useful life. The project would require additional working capital of P1,000, which would be released at the end of the project. The Audi Company's ax rate is 30% and its discount rate is 10%. What is the net present value for the asset?

ears and would have a useful life of 5 years and would have a salvage value of P7,000. For tax purposes, the entire original cost of the assets would be depreciated over 5 years using the traight-line method and the salvage value would be ignored. The asset would generate annual et cash inflows of P27,000 throughout its useful life. The project would require additional working capital of P1,000, which would be released at the end of the project. The Audi Company's ax rate is 30% and its discount rate is 10%. What is the net present value for the asset?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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