TUV Inc. is evaluating two mutually exclusive machines for its operations. The company's cost of...
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Accounting
TUV Inc. is evaluating two mutually exclusive machines for its operations. The company's cost of capital is 12% and the tax rate is 27%. Below are the details:
Particulars | Machine E | Machine F |
Cost of machine | 17,50,000 | 19,00,000 |
Expected life | 5 years | 5 years |
Annual Income (before Tax & Depreciation) | 4,75,000 | 5,50,000 |
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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