5. A project is estimated to cost P100, 000, last 8 years and have a P10, 000 salvage value. The annual gross income is expected to average P24, 000 and annual expenses, excluding depreciation, will total P6,000. If capital is earning 10% before income taxes. Determine if this is a desirable investment using the annual cost method.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
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Engineering Economics17 Please use Future Worth Method for solution thankyou
5. A project is estimated to cost P100, 000, last 8
years and have a P10, 000 salvage value. The
annual gross income is expected to average P24,
000 and annual expenses, excluding depreciation,
will total P6,000. If capital is earning 10% before
income taxes. Determine if this is a desirable
investment using the annual cost method.
Transcribed Image Text:5. A project is estimated to cost P100, 000, last 8 years and have a P10, 000 salvage value. The annual gross income is expected to average P24, 000 and annual expenses, excluding depreciation, will total P6,000. If capital is earning 10% before income taxes. Determine if this is a desirable investment using the annual cost method.
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