QRS Company is considering purchasing one of two machines. The company's cost of capital is...
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QRS Company is considering purchasing one of two machines. The company's cost of capital is 14% and the tax rate is 30%. Details are as follows:
Particulars | Machine C | Machine D |
Cost of machine | 20,00,000 | 22,50,000 |
Expected life | 4 years | 4 years |
Annual Income (before Tax & Depreciation) | 6,50,000 | 7,50,000 |
Depreciation is charged on a straight-line basis. You are required to calculate: a. Discounted payback period b. NPV c. Profitability index
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