Q2. Tulsian Ltd. provides you the following information : Rs. 6,00,000 1. Purchase Price of each Machine 2. Working Capital Rs. 3,00,000 3. Useful Life of each machine 5 years Estimated Salvage Value at the end of useful life Rs. 1,00,000 5. Actual Salvage Value realised at the end of useful life Rs 1,20,000 6. Method of Depreciation 4. Straight line 7. Tax Rate 30% 8. Earning before depreciation & tax: Year 1 Year 2 Year 3 Year 4 Year 5 Machine 3,00,000 12,00,000 3,00,000 3,00,000 3,00,000 3,00,000 Machine X 1,00,000 2,00,000 3,00,000 Machine Y 5,00,000 4,00,000 3,00,000 2,00,000 Machine Z Suggest which machine should the company go for on the basis of: A. NPV method (Cost of Capital for the purpose is 10%) B. IRR method C. Profitability Index method (Cost of Capital for the purpose is 10%) D. Discounted Payback Period Method (Cost of Capital for the purpose is 10%)

Q2. Tulsian Ltd. provides you the following information : Rs. 6,00,000 1. Purchase Price of each Machine 2. Working Capital Rs. 3,00,000 3. Useful Life of each machine 5 years Estimated Salvage Value at the end of useful life Rs. 1,00,000 5. Actual Salvage Value realised at the end of useful life Rs 1,20,000 6. Method of Depreciation 4. Straight line 7. Tax Rate 30% 8. Earning before depreciation & tax: Year 1 Year 2 Year 3 Year 4 Year 5 Machine 3,00,000 12,00,000 3,00,000 3,00,000 3,00,000 3,00,000 Machine X 1,00,000 2,00,000 3,00,000 Machine Y 5,00,000 4,00,000 3,00,000 2,00,000 Machine Z Suggest which machine should the company go for on the basis of: A. NPV method (Cost of Capital for the purpose is 10%) B. IRR method C. Profitability Index method (Cost of Capital for the purpose is 10%) D. Discounted Payback Period Method (Cost of Capital for the purpose is 10%)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 8PA: Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the...

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