a company replace an old machinery with salvage value of rs.100000 replaced by a machinery costing 500000.the relevant cash flows for evaluation of this project is ?
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t cash flows for evaluation of this project is 400000(500000-100000)
sujiritha95:
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₹400000 needs to be paid by the company in order to replace the old machinery with the new one.
Given:
- Salvage value of machinery = ₹100000
- Cost of new machinery purchased = ₹500000
To find:
Cash flow for evaluation of this project.
Step by step explanation:
The overall cash flow for this project will be equal to the difference in the amount of the new machinery purchased and the amount in which the old machinery is sold i.e., its salvage value.
→ Overall cash flow = Cost of new machinery - Salvage value
⇒ 500000 - 100000
⇒ ₹400000
∴ The company has to pay ₹400000 for the new machinery.
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