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XYZ Corporation has provided you with the following information. Total depreciable value of the new equipment, P 665,000. Installation cost P 50,000, transportation cost, P 15,000. Incremental working capital P 20,000. Useful life is 10 years. Straight line method of depreciation will be used . Compute for the Purchase price of the new equipment is P 600,000. Net investment is P685,000. Annual depreciation is P 66,500. Assuming that the purchase of the new equipment will result to a yearly reduction in materialcost of P 50,000 and in labor and overhead of P24,500 and income tax rate is 32%. How much is net increase in income. how much is the net cash savings.

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Financial Management, Finance

Category:- Financial Management
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