Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it requires P20,000.00 per year to maintain and must be replaced at the same amount with a salvage value of P300,000.00 after 5 years if the interest rate is 12% per annum.

Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it requires P20,000.00 per year to maintain and must be replaced at the same amount with a salvage value of P300,000.00 after 5 years if the interest rate is 12% per annum.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 2P

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Question

CAPITALIZED COST
1. Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it
requires P20,000.00 per year to maintain and must be replaced at the same amount with
a salvage value of P300,000.00 after 5 years if the interest rate is 12% per annum.

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

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