ABC Corporation is considering selecting a machine out of two mutually exclusive machines. The company's...
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Accounting
- ABC Corporation is considering selecting a machine out of two mutually exclusive machines. The company's cost of capital is 10% and the tax rate is 25%. Other information related to both machines is as follows:
Particulars | Machine A | Machine B |
Cost of machine | 1,200,000 | 1,500,000 |
Expected life | 6 years | 6 years |
Annual Income (before Tax & depreciation) | 350,000 | 450,000 |
- Depreciation is charged on a straight-line basis. You are required to calculate: a. Discounted payback b. NPV c. Profitability index d. IRR
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