Chapter 14 (2012) - Chapter 14 Capital Budgeting Prob 1 Prob 2 Prob 3 Prob 4 Net of purchase price net of discount whether taken or not taken

Chapter 14 (2012) - Chapter 14 Capital Budgeting Prob 1...

This preview shows page 1 - 4 out of 4 pages.

Chapter 14 Capital Budgeting Prob 1 Prob 2 Prob 3 Prob 4 Cash Outflow Direct costs Net of purchase price, net of discount, whether taken or not taken P140,000.00 P4,800,000.00 P900,000.00 P700,000.00 Add’l or incremental costs to prepare the asset for use -0- P45,000.00 P102,000.00 -0- Increase in working capital base -0- P350,000.00 P110,000.00 P2,520,000.00 Indirect costs Add’l tax in case of gain on sale of old asset -0- -0- -0- -0- Add’t tax from savings from avoided repairs if old asset is replaced P7,500.00 P160,000.00 P30,000.00 -0- Cash Inflows Direct inflows
Image of page 1
Proceeds from sale or trade-in allow from disposal of old asset (P7,000.00) (P212,000.00) (P22,000.00) -0- Indirect outflows Tax savings in case of loss on sale of old asset -0- (P8,000.00) (P9,500.00) -0- Savings from avoided costs of repairs and maintenance if old asset is replaced (P25,000.00) (P400,000.00) (P120,000.00) -0- NET COST OF INVESTMENT P115,500 P4,735,000.00 P990,500.00 P3,220,000.00 Prob 5 NET RETURNS Cash flows from operations before tax Annual sales P6,000,000.00 Annual costs & exp (P3,240,000.00) Depreciation (P240,000.00) Profit before tax (PBT) P2,520,000.00 Income tax (P756,000.00) Profit after tax P1,764,000.00 Depreciation P240,000.00
Image of page 2
Net annual cash inflow after tax P2,004,000.00 Prob 16 PAYBACK PERIOD, PAYBACK RECIPROCAL, AND ACCOUNTING RATE OF RETURN, EVEN CASH FLOWS Expected annual sales revenue P600,000.00 Annual out-of-pocket costs
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 4 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes