To address the chronic traffic condition at a major thoroughfare, two plans are being considered. Plan A is to build a complete flyover costing P2 Billion, which would provide for all needs during the next 20 years. Annual maintenance costs are estimated to be P2M for the first 10 years and P3M for the next 10 years. Plan B is to build a partial flyover at a cost of P1Billion, which would be enough for the next 10 years. At the end of 10 years, the flyover will be completed at an estimated cost of P1536530054. Annual maintenance would cost P51898016 during the first 10 years and P95090069 for the next 10 years. The money is worth 23%, what is the Present Value of Plan B?

To address the chronic traffic condition at a major thoroughfare, two plans are being considered. Plan A is to build a complete flyover costing P2 Billion, which would provide for all needs during the next 20 years. Annual maintenance costs are estimated to be P2M for the first 10 years and P3M for the next 10 years. Plan B is to build a partial flyover at a cost of P1Billion, which would be enough for the next 10 years. At the end of 10 years, the flyover will be completed at an estimated cost of P1536530054. Annual maintenance would cost P51898016 during the first 10 years and P95090069 for the next 10 years. The money is worth 23%, what is the Present Value of Plan B?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PB: Markoff Products is considering two competing projects, but only one will be selected. Project A...

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