Solution-What is the net present value of the asset

What is the net present value of the asset

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Reference no: EM133047704

Problem - ABC company is considering purchasing an asset for P60,000 that would have a useful life of 5 years and would have a salvage value of P7,000. For tax purposes, the entire original cost of the asset would be depreciated over 5 years using the straight-line method and the salvage value would be ignored. The asset would generate annual net cash inflows of P27,000 throughout its useful life. The project would require additional working capital of P1,000, which would be released at the end of the project. The company's tax rate is 30% and its discount rate is 10%. What is the net present value of the asset?

Reference no: EM133047704

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What is the net present value of the asset

Reference no: EM133047704

Reference no: EM133047704

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