Lor Industries is analyzing a capital investment proposal for new machinery to produce a new product over the next ten years. At the end of the ten years, the machinery must be disposed of with a zero net book value but with a scrap salvage value of P20,000. It will require some P30,000 to remove the machinery. The applicable tax rate is 35%. The appropriate “end-of-life” cash flow based on the foregoing information is *
Lor Industries is analyzing a capital investment proposal for new machinery to produce a new product over the next ten years. At the end of the ten years, the machinery must be disposed of with a zero net book value but with a scrap salvage value of P20,000. It will require some P30,000 to remove the machinery. The applicable tax rate is 35%. The appropriate “end-of-life” cash flow based on the foregoing information is *
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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Lor Industries is analyzing a capital investment proposal for new machinery to produce a new product over the next ten years. At the end of the ten years, the machinery must be disposed of with a zero net book value but with a scrap salvage value of P20,000. It will require some P30,000 to remove the machinery. The applicable tax rate is 35%. The appropriate “end-of-life” cash flow based on the foregoing information is *
A. Inflow of P30,000.
B. Outflow of P6,500.
C. Outflow of P10,000.
D. Outflow of P17,000.
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