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What was the cost of the machine for nec company

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Reference no: EM133006916

NEC Company purchased a machine that will be depreciated on the straight line basis over an estimated useful life of seven years and no salvage value. The machine is expected to generate cash flow from operations, net of income taxes, of P80,000 in each of the seven years. The company's expected rate of return is 12%.

Information on present value factors is as follows:

Present Value of P1 at 12% for seven periods 0.452

Present value of an ordinary annuity of P1 at

12% for seven periods 4.564

Problem 1: Assuming a positive net present value of P12,720, what was the cost of the machine?

A. P377,840
B. P253,120
C. P240,400
D. P352,400

Reference no: EM133006916

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