The engineer of a medium scale industry was instructed to prepare at least two plans which is to be considered by management for the improvement of their operations. plan "a" calls for an initial investment of P200,000 now with a prospective salvage value of 20% of the first cost 20 years hence. the operation and maintenance disbursement are estimated to be P15,000 a year and taxes will be 2% of first cost. Plan b calls for an immediate investment of P140,000 and a second investment of 160,000 eight years later. the operation and maintenance disbursements will be P9,000 a year for initial installation and P8,000 a year for the second installation. At the end of 20 years the salvage value shall be 20% of the investments. Taxes will be 2% of the first cost. If money is worth 12%, which plan would you recommend? Answer Plan A (anual cost =19,000, PW=337,711) Plan B (Anual cost=11,800, PW=314,564) All I need is a solution in this problem. Our subject is engineering economics and the lesson is economic study method
The engineer of a medium scale industry was instructed to prepare at least two plans which is to be considered by management for the improvement of their operations. plan "a" calls for an initial investment of P200,000 now with a prospective salvage value of 20% of the first cost 20 years hence. the operation and maintenance disbursement are estimated to be P15,000 a year and taxes will be 2% of first cost. Plan b calls for an immediate investment of P140,000 and a second investment of 160,000 eight years later. the operation and maintenance disbursements will be P9,000 a year for initial installation and P8,000 a year for the second installation. At the end of 20 years the salvage value shall be 20% of the investments. Taxes will be 2% of the first cost. If money is worth 12%, which plan would you recommend? Answer Plan A (anual cost =19,000, PW=337,711) Plan B (Anual cost=11,800, PW=314,564) All I need is a solution in this problem. Our subject is engineering economics and the lesson is economic study method
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
The engineer of a medium scale industry was instructed to prepare at least two plans which is to be considered by management for the improvement of their operations. plan "a" calls for an
initial investment of P200,000 now with a prospective salvage value of 20% of the first cost 20 years hence. the operation and maintenance disbursement are estimated to be P15,000 a year and taxes will be 2% of first cost.
Plan b calls for an immediate investment of P140,000 and a second investment of 160,000 eight years later. the operation and maintenance disbursements will be P9,000 a year for initial installation and P8,000 a year for the second installation. At the end of 20 years the salvage value shall be 20% of the investments. Taxes will be 2% of the first cost.
If money is worth 12%, which plan would you recommend?
Answer
Plan A
(anual cost =19,000, PW=337,711)
Plan B
(Anual cost=11,800, PW=314,564)
All I need is a solution in this problem. Our subject is engineering economics and the lesson is economic study method
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