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What is the net benefit of the proposed new equipment

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Question - Assume that National Corporation is considering the renovation and/or replacement of some of its older and outdated carpet-manufacturing equipment. Its objective is to improve the efficiency of operations in terms of both speed and reduction in the number of defects. The company's finance department has compiled pertinent data that will allow it to conduct a marginal cost-benefit analysis for the proposed equipment replacement.

The cash outlay for new equipment would be approximately P600,000. The net book value of the old equipment and its potential net selling price add up to P250,000. The total benefits from the new equipment (measured in today's pesos) would be P900,000. The benefits of the old equipment over a similar period of time (measured in today's pesos) would be P300,000.

Required - What is the net benefit of the proposed new equipment?

Reference no: EM133105098

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