A clothing plant consumed 600,000 kwh of electrie energy annually and pays an average of P2.05 per kwh. A study is being made to generate its own power to supply the plant with the energy required, and that the power plant installed would cost P2037720. Annual operation and maintenance is P800,000. Other expenses cost P100,000 per year. Life of power plant is 17 years, salvage value at the end of life is P212097; annual taxes and insurance, 5% of first cost, and rate of interest is 15%. Using the sinking fund method for depreciation, determine the rate of return of the planned power generator based on the net annual savings. Round off your answer to two decimal places. Note: Do not include the unit (ex. Peso, Dollar, Percent etc) in your numerical answer below. Add your answer

A clothing plant consumed 600,000 kwh of electrie energy annually and pays an average of P2.05 per kwh. A study is being made to generate its own power to supply the plant with the energy required, and that the power plant installed would cost P2037720. Annual operation and maintenance is P800,000. Other expenses cost P100,000 per year. Life of power plant is 17 years, salvage value at the end of life is P212097; annual taxes and insurance, 5% of first cost, and rate of interest is 15%. Using the sinking fund method for depreciation, determine the rate of return of the planned power generator based on the net annual savings. Round off your answer to two decimal places. Note: Do not include the unit (ex. Peso, Dollar, Percent etc) in your numerical answer below. Add your answer

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 2P

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