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At the beginning of the year, JeyKey Corporation purchased a new equipment for P360,000. The machine has an estimated useful life of four (4) years with no salvage value. It is expected to produce cash flows from operations, net of income taxes of 32%, as follows:

Year 1 P192,000

2 168,000

3 216,000

4 144,000

5 80,000

JeyKey Corporation uses the sum-of-the-years-digits method (SYD) in computing depreciation of its depreciable assets. Using SYD, the new equipment will be depreciated as follows:

Year 1 (P360,000 x 4/10) P144,000

2 (P360,000 x 3/10) 108,000

3 (P360,000 x 2/10) 72,000

4 (P360,000 x 1/10) 36,000

The company s cost of capital is 10%. The present value factors at 10% are as follows:

End of Year 1 0.909

2 0.826

3 0.751

4 0.683

Total, 4 years 3.17

Question: What is the net present value of the equipment? Correct Answer: 213,864