AvallableAllowed Attempts 1A company that sells computers has proposed to a small public utility company that it purchase asmall electronic computer for P1,000,000 to replace ten calculating machines and theiroperators. An annual service maintenance contract for the computer will be provided at a cost ofP100,000 per year. One operator will be required at a salary of P96,000 per year and oneprogrammer at a salary of P144,000 per year. The expected economical life of the computer is 10years.The calculating machine costs P7,000 each when new, 5 years ago, and presently can be sold forP2,000 each. They have an estimated life of 8 years and an expected ultimate trade-in value ofP1,000 each. Each calculating machine operator receives P84,000 per year. Fringe benefits for alllabor cost 8% of annual salary. Annual maintenance costs on the calculating machines have beenP500 each. Taxes and insurance on all equipment is 2% of the first cost per year.If the capital costs the company about 25%, using the rate of return on additional investmentwould you recommend the computer installation?« PreviousNextamazon

Consider the given data For electronics computer- An investment of P 1,000,000 to purchase a small…

Answered: A company that sells computers has…

Traffic and Highway Engineering

5th Edition

ISBN:9781305156241

Author:Garber, Nicholas J.

Publisher:Garber, Nicholas J.

Chapter13: Evaluating Transportation Alternatives

Section: Chapter Questions

Problem 10P

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An Engineering Firm needs additional equipment for the completion of its project. The first alternative is to purchase a brand new equipment worth P1,500,000 with P400,000 salvage value at the end of its 15-year life. Daily operating cost using this equipment is P500. Second alternative is to rent another equipment for P1,500 per day. What must be the minimum number of days per year the equipment will be used so that purchasing this new equipment is more economical than renting another if interest rate is 18%.
9. An engineer bought an equipment for P500,000. Other expenses including installation amounted toP30,000. At the end of its estimated useful life of 10 years, the salvage value will be 10% of the first cost. Usingstraight line method of depreciation, what is the book value after 5 years? with cash flow

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