XYZ Company contemplates the replacement of old machinery. The annual cost of operating the old machinery is P138,600, excluding depreciation, while the estimate for the new machinery is P91,300. The cost of the new machinery is P160,000, net of the trade-in allowance, with an estimated useful life of 8 years, no residual value. The effective income tax rate of 40% and the cost of capital is 8%. The old machinery has an annual deprecation of P15,000 while the new machinery is estimated to have an annual depreciation of P20,000. The book value of the old machinery is zero

required: Net present value, Profitability index, Net present value index, internal rate of return. 

Answer rating: 100% (QA)

Calculation of Annual cash inflows Currency is P Annual cost of cash operating costs Old machine New ... View the full answer