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What net present value of candy capital budgeting proposal

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Reference no: EM133006922

The Candy Company is evaluating a capital budgeting proposal for the current year. The relevant data follow:

  • The initial investment would be P30,000. It would be depreciated on a straight-line basis over six years with no salvage value.
  • The before-tax annual cash inflow due to this investment is P10,000, and the income tax rate is 40% paid in the same year as incurred. The desired rate of return is 15%.
  • All cash flows occur at year end.

Problem 1: What is the net present value of Candy's capital budgeting proposal?

A. (P7,290)
B. P 7,850
C. P 272
D. P11,760

Reference no: EM133006922

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