A newly hired Sanitary Engineer was made to evaluate the following conditions; An equipment package that costs P500,000 will last for 20 years and have a scrap value at that time of P50,000. repairs will average P30,000 per year. The second equipment package will produce the same units per year. It costs P1,500,000 and the salvage value is P150,000 at the end of 30 years. The repairs for this machine will average P25,000 per year. If money is worth 8% effective, what is the annual cost savings or additional costs if the annual cost method is to be used? (Enter the absolute value of your answer) Note: answer should be in full decimal places, do not round off. For example, the value of x = 0.123456789, Annual cost = 100,000 (0.123456789) = 12,345.6789
A newly hired Sanitary Engineer was made to evaluate the following conditions; An equipment package that costs P500,000 will last for 20 years and have a scrap value at that time of P50,000. repairs will average P30,000 per year. The second equipment package will produce the same units per year. It costs P1,500,000 and the salvage value is P150,000 at the end of 30 years. The repairs for this machine will average P25,000 per year. If money is worth 8% effective, what is the annual cost savings or additional costs if the annual cost method is to be used? (Enter the absolute value of your answer) Note: answer should be in full decimal places, do not round off. For example, the value of x = 0.123456789, Annual cost = 100,000 (0.123456789) = 12,345.6789
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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A newly hired Sanitary Engineer was made to evaluate the following conditions;
An equipment package that costs P500,000 will last for 20 years and have a scrap value at that time of P50,000. repairs will average P30,000 per year. The second equipment package will produce the same units per year. It costs P1,500,000 and the salvage value is P150,000 at the end of 30 years. The repairs for this machine will average P25,000 per year. If money is worth 8% effective, what is the annual cost savings or additional costs if the annual cost method is to be used? (Enter the absolute value of your answer)
Note: answer should be in full decimal places, do not round off.
For example, the value of x = 0.123456789,
Annual cost = 100,000 (0.123456789) = 12,345.6789
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