The ABC company is considering constructing a plant tomanufacture a proposed new product. The land costsP15,000,000, the building costs P30,000,000, theequipment costs P12,500,000, and P5,000,000 workingcapital is required. At the end of 12 years, the land canbe sold for P25,000,000, the building for P12,000,000,the equipment for P250,000 and all of the working capitalrecovered. 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%, whatshould be the minimum annual sales for 12 years tojustify the investment?> Anal worth kunal octFind: Minimum annual sales for 12 years to justify theinvestment

let us assume, X be minimum annual sales for 12 years. Annual cost = Appreciated value of land +X

the end of 12 years, the land ca , the building for P12,000,000, 000 and all of the working capita isbursements for labor, materials are estimated to cost P23,750,000 a minimum return of 25%, what nnual sales for 12 years to Mual worth kn

the end of 12 years, the land ca , the building for P12,000,000, 000 and all of the working capita isbursements for labor, materials are estimated to cost P23,750,000 a minimum return of 25%, what nnual sales for 12 years to Mual worth kn

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 28P: Friedman Company is considering installing a new IT system. The cost of the new system is estimated...

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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

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?
> Anal worth kunal oct
Find: Minimum annual sales for 12 years to justify the
investment

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