Question

POR Ltd. has a machine with an additional life of 5 years. It costs 10,00,000
and has a book value of 4,00,000. A new machine of same capacity costing
*20,00,000 is available. There will be incremental earning of 5,00,000 due to
improved technology. The life of the machine is 5 years at the end of which it will
have a scrap value of 2,00,000. The income tax rate is 40% and as a policy, the
firm does not make investment if the yield is less than 12% per annum. The old
machine, if sold today, will realize 1,00,000. It will have no salvage value if sold
after 5 years.
Advice the firm whether the old machine should be replaced or not.
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Answer 1

Answer:

first write chapter name then ask