An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole cost P18,000 each and will last 20 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. If money is worth 12 percent, which pole should be used? Assume annual taxes amount to 1 percent of first cost and zero salvage value in both cases.

An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole cost P18,000 each and will last 20 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. If money is worth 12 percent, which pole should be used? Assume annual taxes amount to 1 percent of first cost and zero salvage value in both cases.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 11PROB

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