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Find the net investment assigned to the new machine

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Question - Net cost of investment - Sunshine Corporation is planning to purchase a new machine costing P2,800,000, with freight and installation costs amounting to P135,000. The old unit to be traded-in will be given a trade-in allowance of P260,000. Other assets that are to be retired as a result of the acquisition of the new machine can be sold for P52,000. The loss on the retirement of these other assets is P50,000 and will reduce taxes by P20,000. If the new machine is not purchased, extensive repairs on the old machine will have to be made at an estimated cost of P400,000. This cost can be avoided by purchasing the new machine. Additional gross working capital of P350,000 will be needed to support operations planned with the new machine. Find the net investment assigned to the new machine for strategic decision analysis.

Reference no: EM133069487

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