A company is considering whether to purchase a new machine. Machines A and B are available...
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A company is considering whether to purchase a new machine. Machines A and B are available for RM92,000 each. Earnings after taxation are as follows: Year 1 2 3 4 5 Machine A (RM) 34,000 32,000 40,000 24,000 16,000 Machine B (RM) 18,000 24,000 32,000 48,000 32,000 By using a discount rate of 10%, you are required to evaluate the two alternatives using the following: a. Payback method, and b. Net present value method. A company is considering whether to purchase a new machine. Machines A and B are available for RM92,000 each. Earnings after taxation are as follows: Year 1 2 3 4 5 Machine A (RM) 34,000 32,000 40,000 24,000 16,000 Machine B (RM) 18,000 24,000 32,000 48,000 32,000 By using a discount rate of 10%, you are required to evaluate the two alternatives using the following: a. Payback method, and b. Net present value method.
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Answer rating: 100% (QA)
a To evaluate the two alternatives using the payback method we need to calculate the payback period for each machine The payback period is the length ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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