A new equipment costing Php800,000 with five years useful life, and Php40,000 residual at the end offive years, is expected to bring the following cash inflows, after tax:YearNet cash inflow0102Php350,000300,00003250,000150,00080,0000405Required:a. Determine the discounted rate of return.

Formula: Discount rate= Lower Rate +Lower NPV×Higher Rate-Lower RateLower NPV-Higher NPV

Answered: Required: a. Determine the discounted…

Business

Accounting

Required: a. Determine the discounted rate of return.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 15EA: Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years....

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Question

A new equipment costing Php800,000 with five years useful life, and Php40,000 residual at the end of
five years, is expected to bring the following cash inflows, after tax:
Year
Net cash inflow
01
02
Php350,000
300,000
03
250,000
150,000
80,000
04
05
Required:
a. Determine the discounted rate of return.

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