Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If theannual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000.First Cost 300000Present worth of the annual maintenance cost*Letters onlyPerpetuity of the depreciation costCapitalized costa. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700

Given:- Initial cost=P300000 Replacement required at every 15 years Annual maintenance cost= P5000…

First Cost 300000 Present worth of the annual maintenance cost *Letters only Perpetuity of the depreciation cost Capitalized cost a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700 a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700

First Cost 300000 Present worth of the annual maintenance cost *Letters only Perpetuity of the depreciation cost Capitalized cost a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700 a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...

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Question

Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If the
annual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000.
First Cost 300000
Present worth of the annual maintenance cost
*Letters only
Perpetuity of the depreciation cost
Capitalized cost
a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700
a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700

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