Problem 3. Mala Prohibita Inc. is evaluating a proposal to acquire a new equipment. The equipment would require an investment of P417,860, including freight and installation cost of P40,000. It expected to have a 10- year life with no scrap value at the end of its life. It has been estimated that the new equipment would increase the company's cash inflows, net of expenses and income taxes by P68,000. The company can issue its 7% ANSWER P1,000 par value bond to fund the project. The same type of bond is available in the market at P932.04836 per bond with interest payable semi-annually for ten years. The company is subject to 32% income tax. Determine the Cost of Capital (k) PROBLEM 4 Solution: Problem 4. Refer to problem no. 3. Using NPV and IRR method, give your recommendation if the company ONLY should push the project or not. Explain your answer.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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