Answered: Determine the capitalized cost of an…

Determine the capitalized cost of an expenditure of P 200,000 at time 0, P 25,000 in years 2 through 5, and P 40,000 per year from year 6 onward. Use an interest rate of 12% per year.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Determine the capitalized cost of an expenditure of P 200,000 at time 0, P 25,000
in years 2 through 5, and P 40,000 per year from year 6 onward. Use an interest
rate of 12% per year. Calculate it manually, not in excel. Show complete solution and formula used. Please write it in a paper in order for us to understand. Don't type it. Thank you!
ANS. P 456,940.26

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