NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new machine would cost P90,000, have a five year life, and no salvage value. Variable operating costs would be P100,000 per year. The present machine has a book value of P50,000, a remaining life of five years and disposal value now of P5,000. Variable operating costs would be P125,000 per year. Ignoring present value calculations and income taxes, and considering five years in total, what would be the increase (decrease) in profit before income taxes by acquiring the new machine as opposed to retaining the present one? * O P10,000 decrease O P15,000 decrease O P35,000 increase O P40,000 increase

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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NUBD Co. has an opportunity to acquire a new machine to replace one of its present
machines. The new machine would cost P90,000, have a five year life, and no salvage value.
Variable operating costs would be P100,000 per year. The present machine has a book value of
P50,000, a remaining life of five years and disposal value now of P5,000. Variable operating
costs would be P125,000 per year. Ignoring present value calculations and income taxes, and
considering five years in total, what would be the increase (decrease) in profit before income
taxes by acquiring the new machine as opposed to retaining the present one? *
O P10,000 decrease
O P15,000 decrease
O P35,000 increase
O P40,000 increase
Transcribed Image Text:NUBD Co. has an opportunity to acquire a new machine to replace one of its present machines. The new machine would cost P90,000, have a five year life, and no salvage value. Variable operating costs would be P100,000 per year. The present machine has a book value of P50,000, a remaining life of five years and disposal value now of P5,000. Variable operating costs would be P125,000 per year. Ignoring present value calculations and income taxes, and considering five years in total, what would be the increase (decrease) in profit before income taxes by acquiring the new machine as opposed to retaining the present one? * O P10,000 decrease O P15,000 decrease O P35,000 increase O P40,000 increase
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