The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment forP250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment? 1. The ABC company is considering constructing a plant to manufacture a proposed newproduct. The land costs P15,000,000, the building costs P30,000,000, the equipmentcosts P12,500,000, and P5,000,000 working capital is required. At the end of 12 years,the land can be sold for P25,000,000, the building for P12,000,000, the equipment forP250,000 and all of the working capital recovered. The annual disbursements for labor,materials, and all other expenses are estimated to cost P23,750,000. If the companyrequires a minimum return of 25%, what should be the minimum annual sales for 12years to justify the investment?

Given:- land costs =P15,000,000 building costs =P30,000,000 equipment costs =P12,500,000, P5,000,000…

P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12

P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12

Fundamentals Of Construction Estimating

4th Edition

ISBN:9781337399395

Author:Pratt, David J.

Publisher:Pratt, David J.

Chapter9: Pricing Construction Equipment

Section: Chapter Questions

Problem 6RQ

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Question

The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for
P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment?

1. The ABC company is considering constructing a plant to manufacture a proposed new
product. The land costs P15,000,000, the building costs P30,000,000, the equipment
costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years,
the land can be sold for P25,000,000, the building for P12,000,000, the equipment for
P250,000 and all of the working capital recovered. The annual disbursements for labor,
materials, and all other expenses are estimated to cost P23,750,000. If the company
requires a minimum return of 25%, what should be the minimum annual sales for 12
years to justify the investment?

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