Calculate the capitalized cost of a project that has an initial cost of Php 3,000,000 and an additional investment cost of Php 1,000,000 at the end of every 10 years. The annual operating cost will be Php 100,000 at the end of every year for the first four years and Php 160,000 thereafter. In addition there is expected to be recurring major rework cost of P300,000 every 13 years. Assume i= 15%.
Calculate the capitalized cost of a project that has an initial cost of Php 3,000,000 and an additional investment cost of Php 1,000,000 at the end of every 10 years. The annual operating cost will be Php 100,000 at the end of every year for the first four years and Php 160,000 thereafter. In addition there is expected to be recurring major rework cost of P300,000 every 13 years. Assume i= 15%.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 1P
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Calculate the capitalized cost of a project that has an initial cost of Php
3,000,000 and an additional investment cost of Php 1,000,000 at the end of every
10 years. The annual operating cost will be Php 100,000 at the end of every year
for the first four years and Php 160,000 thereafter. In addition there is expected
to be recurring major rework cost of P300,000 every 13 years. Assume i= 15%.
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