a. The IRR of the project is 12%.
b. The NPV of the project is 5,187
c. The Profitability Index of the project is 102.8%
d. To have 12% IRR, the annual savings of the project need to be P102,436

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ABC Company is considering machinery that costs P282,000 and has a useful life of four years. The production manager believes that the machinery could reduce annual material and labor costs by P100,000. ABC pays a 30% income tax rate and requires a 12% return. ABC uses straight-line depreciation. Excerpt of PVA table 4 periods Periods 9% 4 3.240 10% 3.170 11% 12% 13% 2.974 14% 3.102 3.037 2.914 Which of the following is correct? ABC Company is considering machinery that costs P282,000 and has a useful life of four years. The production manager believes that the machinery could reduce annual material and labor costs by P100,000. ABC pays a 30% income tax rate and requires a 12% return. ABC uses straight-line depreciation. Excerpt of PVA table 4 periods Periods 9% 4 3.240 10% 3.170 11% 12% 13% 2.974 14% 3.102 3.037 2.914 Which of the following is correct?

Answer rating: 100% (QA)

d To have 12 IRR annual savings of the project need to be P102436 1 In order to prove the answers se... View the full answer