12-07 The comparative costs of wooden and steel penstocks for a hydro-electric power plant are as follows: Wood P250,000 First cost Annual operation and maintenance P 1,200 Life 20 years Steel P350,000 R2,000 40 years Taxes, 1.5%; depreciation, 5% sinking fund; expected return, 8 %, Which would you select if given the choice?
12-07 The comparative costs of wooden and steel penstocks for a hydro-electric power plant are as follows: Wood P250,000 First cost Annual operation and maintenance P 1,200 Life 20 years Steel P350,000 R2,000 40 years Taxes, 1.5%; depreciation, 5% sinking fund; expected return, 8 %, Which would you select if given the choice?
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 8PROB
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Transcribed Image Text:12-07 The comparative costs of wooden and steel penstocks for
a hydro-electric power plant are as follows:
First cost
Annual operation and maintenance
Life
Wood
P250,000
P 1,200
20 years
Steel
$350,000
P 2,000
40 years
Taxes, 1.5%; depreciation, 5% sinking fund; expected return, 8%,
Which would you select if given the choice?
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