Reference no: EM132858827
Questions -
Q1) Beta Company plans to replace its company car with a new one. The new car costs P120,000 and its estimated useful life is five years without scrap value. The old car has a book value of P15,000 and can be sold at P12,000. The acquisition of the new car will yield annual cash savings of P20,000 before income tax. Income tax rate is 25%. The payback period of the investment is?
Q2) Coffee Co. has the opportunity to introduce a new product. Coffee Co. expects the product to sell for P100 and to have per-unit variable costs of P60 and annual cash fixed costs of P4,000,000. Expected annual sales volume is 200,000 units. The equipment needed to bring out the new product costs P7,000,000, has a four-year life and no salvage value, and would be depreciated on a straight-line basis. Coffee Co. cost of capital is 12% and its income tax rate is 40%. Find the payback period on this project.
Q3) Bilt-Rite Co. has the opportunity to introduce a new product. Bilt-Rite expects the product to sell for P60 and to have per-unit variable costs of P40 and annual cash fixed costs of P3, 000,000. Expected annual sales volume is 250,000 units. The equipment needed to bring out the new product costs P6, 000,000, has a four-year life and no salvage value, and would be depreciated on a straight-line basis. Bilt-Rite's cost of capital is 10% and its income tax rate is 40%. Find the payback period on this project.
Q4) APJ, Inc. is planning to purchase a new machine that will take six years to recover the cost. The new machine is expected to produce cash flow from operations, net of income taxes, of P4,500 a year for the first three years of the payback period and P3,500 a year of the last three years of the payback period. Depreciation of P3,000 a year shall be charged to income of the six years of the payback period. How much shall the machine cost?
Q5) Louis recently invested in a project that has an expected annual cash inflow of $7,000 for 10 years, and an expected payback period of 3.6 years. How much did Louis invest in the project?
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Compute the total income subject to income tax
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How much shall the machine cost
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