Please explain how to get the above answers. 89. Veritas Ltd is considering...
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89. Veritas Ltd is considering investing in a new machine which costs $450 000. For accounting purposes this machine can be fully depreciated over 6 years; but for tax purposes, the machine can be fully depreciated over 5 years. The machine has no resale value. The annual cost savings resulting from the purpose of this machine is $100 000. Assume a tax rate of 30 per cent. The annual net cash flow is A. $97 000 B. $92 500 C. $17 500 D. $7000 AACSB: Analytical Difficulty: Easy Learning Objective: 21.07 Use the payback and accounting rate of return methods to evaluate capital expenditure proposals, and evaluate their usefulness 90. Veritas Ltd is considering investing in a new machine which costs $450 000. For accounting purposes this machine can be fully depreciated over 6 years; but for tax purposes, the machine can be fully depreciated over 5 years. The machine has no resale value. The annual cost savings resulting from the purpose of this machine is $100 000. Assume a tax rate of 30 per cent. The payback period is A. 6.43 years B. 5.71 years C. 4.64 years D. 4.50 years
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Please explain how to get the above answers. 