NE-YO Corporation is currently manufacturing laptops using traditional technology. With the improving economic decisions and increasing demands of the market, it pushed through with the purchase and...


NE-YO Corporation is currently manufacturing laptops using traditional technology. With the improving economic decisions and increasing demands of the market, it pushed through with the purchase and operation of a more sophisticated machine. The net investment of decision is P276,200 which includes P247,500 capitalizable cost of machine and P50,000 of additional net working capital. The machine has a useful life of 5 years and a salvage value of P27,500. The annual operating cash inflow and outflow from this decision is P140,000 and P60,000 respectively. Assume a tax rate of 40% and a cost of capital of 10%. Compute the following:


A. Net present value of the investment decision


B. Profitability index of the investment decision



Jun 07, 2022
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