A wastewater treatment facility is planning to purchase a new sludge dryer equipment to replace its present unit. The new sludge dryer would cost P135,402 with a five (5) year-life, and no estimated salvage value. Its operating cost would be P150,064 a year. The sludge dryer that they are currently using at present has a book value of P75,260 and a remaining life of 5 years. It has also no estimated salvage value. And its variable operating cost would be cost P187.568 a year. Money is worth 10%. Using ROR method, which is profitable, to buy the new sludge dryer or retain the old equipment? (express your answer in percentage)

A wastewater treatment facility is planning to purchase a new sludge dryer equipment to replace its present unit. The new sludge dryer would cost P135,402 with a five (5) year-life, and no estimated salvage value. Its operating cost would be P150,064 a year. The sludge dryer that they are currently using at present has a book value of P75,260 and a remaining life of 5 years. It has also no estimated salvage value. And its variable operating cost would be cost P187.568 a year. Money is worth 10%. Using ROR method, which is profitable, to buy the new sludge dryer or retain the old equipment? (express your answer in percentage)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 14P

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