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Should the machine be acquired

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Question - Fe Company is considering to buy a new machine which cost P50,000. It will be a labor saving investment which will reduce payroll by P13,500 per year. Its useful life is 8 years and it will have zero salvage value. A minimum desired rate of return of 48% is used for capital investment decisions. Information on present value factors is as follows:

Present value of P1 for 8 periods at 18% .266

Present value of an annuity of P1 for 8 periods 4.078

Should the machine be acquired?

Reference no: EM132819545

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