How much is the annual depreciation of the equipment

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A project proposal with a 5 years life requires a new capital equipment worth P 2,000,000. It also requires an additional initial investment of P250,000, 60% of which is financed by trade credit. The new equipment has a useful life of 5 years, no salvage value and will be depreciated using the straight line method. The new equipment will result to an annual increase in sales of P800,000; increase in operating expenses of P 350,000 per year. Income tax rate is 32%.

Problem 1: How much is the net investment cash flow?

Problem 2: How much is the depreciable value of the equipment?

Problem 3: How much is the annual depreciation of the equipment?

Problem 4: How much is the operating cash flow for the first year?

Reference no: EM132725180

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