A bridge that was constructed at a cost of ₱75,000,000 is expected to last 30 years, at the end of which time its renewal cost will be P40,000,000. Annual repairs and maintenance are P3,000,000. What is the capitalized cost of the bridge at an interest of 6%?

A bridge that was constructed at a cost of ₱75,000,000 is expected to last 30 years, at the end of which time its renewal cost will be P40,000,000. Annual repairs and maintenance are P3,000,000. What is the capitalized cost of the bridge at an interest of 6%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 1P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

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A bridge that was constructed at a cost of ₱75,000,000 is expected to last 30
years, at the end of which time its renewal cost will be P40,000,000. Annual
repairs and maintenance are P3,000,000. What is the capitalized cost of the
bridge at an interest of 6%?

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