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How much will the new machine cost

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Question - Li2 Akin Za Corporation is planning to acquire a new machine that will have an estimated payback period of five years. It will be depreciated on a straight line basis at P10,000 per year. It is expected to produce cash flows from operations, net of income taxes, of P20,000 per year in each of the first 2 years of the payback period and P12,000 per year in each of the last three years of the payback period. Li2 Akin Za Corporation is subject to 32% income tax rate. How much will the new machine cost?

a. P76,000

b. P101,680

c. P67,680

d. P126,000

Reference no: EM133118066

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