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
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
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section10.A: Mutually Exclusive Investments Having Unequal Lives
Problem 2P
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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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