An untreated wooden pole that will last 10 years under a certain soil condition costs P 12,000. If a treated pole will last for 20 years, what is the maximum justifiable amount that can be paid for the treated pole? Assume 1% tax of the first cost for the treated pole and 12% interest rate. Use annual cost method.

An untreated wooden pole that will last 10 years under a certain soil condition costs P 12,000. If a treated pole will last for 20 years, what is the maximum justifiable amount that can be paid for the treated pole? Assume 1% tax of the first cost for the treated pole and 12% interest rate. Use annual cost method.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 1E: A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash...

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