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What will be the bailout period for the new machine

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Questions - Q1. Abanao Company is planning to purchase an new machine for the amount of P90,000, with an estimated useful life of 5 years and a salvage value of P10,000. The machine will be depreciated using the straight line method. The machine is expected to produce cash flows from operations, net of income taxes of P36,000 a year in the next 5 years. The machine's salvage value is P20,000 in years 1 and 2 and P15,000 in years 3 and 4. What will be the bailout period for the new machine?

A. 1.4 years

B. 2.2 years

C. 1.9 years

D. 3.4 years

Q2. An investment project has the following characteristics: Cost, P22,820; Annual cash inflows, P5,000; internal rate of return, 12%. What is the useful life of the project?

A. 2 points

B. 7 years

C. 12 years

D. 4.56 years.

Reference no: EM133089654

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