Canon Limited wants to replace equipment that has reached the end of its useful life with new
Fantastic news! We've Found the answer you've been seeking!
Question:
Canon Limited wants to replace equipment that has reached the end of its useful life with new equipment that will cost R600 000. Additional installation costs of R80 000 will have to be incurred on this new equipment.
The old equipment has a NIL book value but can be sold for R50 000. Clean-up and removal costs of R6 000 will have to be paid for the old equipment.
Working capital for the old equipment amounted to R70 000. The new equipment will result in an increase in working capital of R110 000.
The company is subject to a tax rate of 28%.
REQUIRED
Calculate the initial investment of the replacement project for Canon Ltd.
Expert Answer:
Posted Date:
