Question

ABC and co. is considering a proposal to replace one of its plants costing RS

60,000 (having a written own value of Rs 24,000). The remaining economic life of

plant is 4 years after which it will have no salvage value. However, if said today it

has a salvage value of Rs 20,000. The new machine costing Rs 1,30,000 is also

excepted to have a life of 4 years with a scrap value of Rs 18,000 the machine,

due to its technological superiority is expected to contribute additional annual

benefit (before depreciation and tax ) of Rs 60,000.Find out cash flows associated

with this decision given that the tax rate applicable to firm is 30% (the capital gain

or loss may be taken as not subject to tax)​

Answer 1

Answer:

the benift of applicable to firm is 30 so that tax is rate per benift cash flows.