Suppose a businessman is considering the purchase of a business machine that is expected to be obsolete in five years. The machine is worth Php 100,000.00. The prevailing rate of interest is 15% per year. Suppose he made an estimate of his gross yearly income as follows: Year Income 1 Php 20,000.00 2 Php 25,000.00 3 Php 35,000.00 4 Php 30,000.00 5 Php 28,000.00 Is the business profitable? Why or why not?
Suppose a businessman is considering the purchase of a business machine that is expected to be obsolete in five years. The machine is worth Php 100,000.00. The prevailing rate of interest is 15% per year. Suppose he made an estimate of his gross yearly income as follows: Year Income 1 Php 20,000.00 2 Php 25,000.00 3 Php 35,000.00 4 Php 30,000.00 5 Php 28,000.00 Is the business profitable? Why or why not?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...
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Suppose a businessman is considering the purchase of a business machine that is expected to be obsolete in five years. The machine is worth Php 100,000.00. The prevailing rate of interest is 15% per year. Suppose he made an estimate of his gross yearly income as follows:
|
Year |
Income |
|
1 |
Php 20,000.00 |
|
2 |
Php 25,000.00 |
|
3 |
Php 35,000.00 |
|
4 |
Php 30,000.00 |
|
5 |
Php 28,000.00 |
Is the business profitable? Why or why not?
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