he average annual cost of damages caused by floods to certain subdivision located along Pasig River is estimated at P700,000. To build a gravity dam to protect the area from the floods, would cost P2,500,00.00 and would involved an annual maintenance cost of P20,000.00. With interest at 8% compounded annually, how many years will it take for

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
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Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section10.A: Mutually Exclusive Investments Having Unequal Lives
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The average annual cost of damages caused by floods to certain subdivision located along Pasig River is estimated at P700,000. To build a gravity dam to protect the area from the floods, would cost P2,500,00.00 and would involved an annual maintenance cost of P20,000.00. With interest at 8% compounded annually, how many years will it take for the dam to pay for itself?

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