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What is the cash flow from selling the machine

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Question - Q1) Naga Company is considering the sale of a machine with a book value of P80,000 and 3 years remaining in its useful life. Straight-line depreciation of P25,000 annually is available. The machine has a current market value of P100,000. What is the cash flow from selling the machine if the tax rate is 40%?

a. P80,000 b. P88,000 c. P92,000 d. P100,000

Q2) A company is considering replacing a machine with one that will save P50,000 per year in cash operating costs and has P20,000 more depreciation expense per year than the existing machine. The tax rate is 40%. Buying the new machine will increase annual net cash flows of the company by

a. P38,000 b. P30,000 c. P20,000 d. P12,000

Reference no: EM133035502

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