Calculate the capitalized cost of a project with a P3,000,000 beginning cost and an extra P850,000 investment cost at the end of every ten years. For the first five years, the yearly running cost will be P100,000 at the end of each year, rising to P160,000 after that. In addition, a recurring significant rework cost of P300,000 is estimated every 13 years. Assume that i=15%.

Calculate the capitalized cost of a project with a P3,000,000 beginning cost and an extra P850,000 investment cost at the end of every ten years. For the first five years, the yearly running cost will be P100,000 at the end of each year, rising to P160,000 after that. In addition, a recurring significant rework cost of P300,000 is estimated every 13 years. Assume that i=15%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 1P

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