do not use excel. manual computation with formula Two years ago, a machine was purchased at a cost of P2,00,000 to be usefulfor eight years. Its salvage value at the end of its life is P25,000. The annualmaintenance cost is P25,000. The market value of the present machine isP1,200,000. Now, a new machine to cater to the need of the present machineis available at P1,500,000 to be useful for six years. Its annual maintenance costis P14,000. The salvage value of the new machine is P20,000. Using an interestrate of 12%, find whether it is worth replacing the present machine with thenew machine.Your answer

When we have to evaluate two or more alternatives financially, we compare their cost of acquisition,…

Answered: rate of 12%, find whether it is worth…

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rate of 12%, find whether it is worth replacing the present machine with the new machine.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 5P

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