Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. ghi pharmaceuticals is considering the purchase of

GHI Pharmaceuticals is considering the purchase of a new machine to enhance production. The details...

70.2K

Verified Solution

Question

Accounting

GHI Pharmaceuticals is considering the purchase of a new machine to enhance production. The details for three machines are given below. Assume all sales are on cash. The corporate income-tax rate is 36%. Interest on capital may be assumed to be 9%.

Particulars

Machine G(Rs)

Machine H(Rs)

Machine I(Rs)

Initial investment

5,50,000

5,80,000

6,00,000

Estimated annual sales

6,50,000

6,80,000

7,00,000

Cost of production:




Direct material

70,000

75,000

80,000

Direct labour

60,000

65,000

70,000

Factory overhead

90,000

95,000

100,000

Administration cost

20,000

22,000

24,000

Selling & Distribution cost

12,000

14,000

16,000

The economic life of Machine G is 4 years, Machine H is 5 years, and Machine I is 3 years. The scrap values are Rs.30,000, Rs.25,000, and Rs.35,000 respectively. Determine the most profitable investment based on the payback period method.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

SCI just paid a dividend (D0) of $12.16 per share, and its annual dividend is expected...

Finance
Q

A study was conducted to estimate hospital costs for accident victims who wore seat belts. Twenty...

Statistics
Q

prove that L^∞ is complete

Advance Math
Q

the most frequently broken bone in the body is the what is the most frequent broken...

Medical Sciences
Q

Evaluate without using a calculator. Write "undefined" or "imaginary" if your result is not a...

Basic Math
Q

A plane traveled 1120 miles to Cheyenne and back. The trip there was with the...

Basic Math
Q

7. I'm Desperate for a new copier for our executive...

Accounting
Q

HI! athi it a business had sales of $3,501,000 and a margin of safety of...

Accounting
Q

Xin is 70 years old, and this year she begins receiving annuity payments from Kool...

Accounting
Q

Net income for the Ashley Company for 2023 was $60,000. Common stockholders equity was $250,000...

Accounting
Q

Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, for...

Accounting
Q

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following...

Accounting