Topic: Capital Budgeting XYZ Company is looking to invest in some new machinery to replace...
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Accounting
Topic: Capital Budgeting
XYZ Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P420,000, would increase annual revenue by P200,000 and annual cash expenses by P50,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value.
Solve for the:
A. Payback period in years
B. Payback period reciprocal
C. Accounting rate of return on initial investment
D. Accounting rate of return on average investment.
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