PT Tamaro has a plastic manufacturing machine. To increase its production capacity, PT Tamaro plans to buy a new machine at a price of 2,400 dollars and an installation of 100 dollars. This machine has an economic life of 5 years with no residual value. projected with this new machine can increase the level of sales to 2000 dollars per year. operational costs that must be borne by the company are the HPP of 40% of sales and $600 in overhead costs including $300 in depreciation costs. The current tax rate is 20% and the desired rate of return is 20%.   Make an analysis whether PT Tamaro's plan to purchase this machine is feasible to implement. Use Discounted Payback Period and Net Present Value?

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
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PT Tamaro has a plastic manufacturing machine. To increase its production capacity, PT Tamaro plans to buy a new machine at a price of 2,400 dollars and an installation of 100 dollars. This machine has an economic life of 5 years with no residual value. projected with this new machine can increase the level of sales to 2000 dollars per year. operational costs that must be borne by the company are the HPP of 40% of sales and $600 in overhead costs including $300 in depreciation costs. The current tax rate is 20% and the desired rate of return is 20%.

 

Make an analysis whether PT Tamaro's plan to purchase this machine is feasible to implement. Use Discounted Payback Period and Net Present Value?

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