# 1 An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18, 000.00 each and will last 20 years. The company is presently using creosoted wooden poles which cost P12, 000.00 per pole and will last 10 years. If money is worth 12 % which pole should be used? Assume annual taxes amount to 1% of first cost and zero salvage value in both cases?

# 1 An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18, 000.00 each and will last 20 years. The company is presently using creosoted wooden poles which cost P12, 000.00 per pole and will last 10 years. If money is worth 12 % which pole should be used? Assume annual taxes amount to 1% of first cost and zero salvage value in both cases?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A bridge that was constructed at a cost of P 75M is expected to last 30 years, at the end of which time its renewal cost will be P 40M. Annual and maintenance cost is P 3M. What is the capitalized cost of the bridge at an interest of 6%?
A plastic manufacturing company in Laguna installed a new boiler at a total cost of P600,000.00 and is estimated to have a useful life of 10 years. It is estimated to have a scrap value at the end of its useful life of P20,000.00. If interest is 12% compounded annually, determine its capitalized cost. Answer. P875,423.48
A new boiler was installed by a textile plant at a total cost P300,000 and project to have a useful life of 15 years. At the end of its useful life, it is estimated to have a salvage value of P30,000. Determine the capitalized cost if interest is 18% compounded annually.
Combined-cycle power plants use two combustion turbines to produceelectricity. Heat from the first turbine’s exhaust is captured to heatwater and produce steam sent to a second steam turbine thatgenerates additional electricity. A 968-megawatt combined-cycle gasfired plant can be purchased for P450 million, has no salvage value,and produces a net cash flow (revenues less expenses) of P50 millionper year over its expected 30-year life.a. If the hurdle rate (MARR) is 14% per year, how profitable aninvestment is this power plant?b. What is the simple payback period for the plant? Is this investmentacceptable?
A wooden pole- untreated, will last for 10 years under a certain soil condition, costs P1.2M. If a treated pole will have a useful life double that of the untreated pole, what is the maximum justifiable amount that can be paid for the treated pole, if the maximum amount of ROI is 12%. Consider the annual taxes and insurance to be 1% of the first cost,
Please provide the complete solution What is the value of a perpetuity of P100 per year if the discount rate is 5% and the cash flows donot begin until two years from now? Answer: P = P1,814.05
A water supply system is being considered for a small district. The system requires an initial investment of P8M, will operate for 15 years and will be sold for P0.4M after that time. Annual operations and maintenance costs is expected to be P48 000.00 for the first year and is expected to increase by P12 000.00 each year thereafter. Determine the annual cost of this project using i= 11%. (Ans. - P1,210,425.43)-PLEASE USE AN ACTUAL FORMULA NOT EXCEL
Annual maintenance costs for a machine are P1,500 this year and are estimated to increase 10% each year every year. What is the present worth of the maintenance cost for six years? a) if i = 8%b) if i = 10%c) if i = 12%
i will 10 upvotes do fast Lifetime savings accounts, known as LSAS, allow people to invest after - tax money without being taxed on any of the gains. If an engineer invests $11,000 now and $ 11,000 each year for the next 15 years, how much will be in the account immediately after the last deposit, provided the account grows by 11% per year? After the last deposit, the balance in the account will be $
Charlie has a project for which he had determined a present worth of $56,620. He now has to calculate the IRR for the project, but unfortunately he has lost complete information about the cash flows. He knows only that the project has a five-year service life and a first cost of $190,000, that a set of equal cash flows occurred at the end of each year, and that the MARR used was 10 percent. What is the IRR for this project?
A pole for an electric distribution cost P10k and is expected to last for 7 years before replacement. If this pole is treated it is expected to last for 15 yrs before replacement but will cost P18k. Assuming the cost of renewal is to be the same compute the saving with the use of the more economical pole at i = 18% compounded annually. a. P14,575.666b. P5064.612c. P19,640.278d. P28,115.276
You are considering an apartment building project that requires an investment of $15, 000, 000. This building has 30 units and you expect the maintenance cost for the apartment building to be $400, 000 the first year which will continue to increase by $50, 000 every year in sub-sequent years. The cost to hire a manager for the building is estimated to be $100, 000 per year. After 6 years of operation, the apartment building can be sold for $16, 000, 000. If the monthly rent per apartment unit is $5, 000, what would be the rate of return on this investment? Assume that the building will remain fully occupied during its six years of operation. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate of return of the CFD. use excel