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Chapter 20, Problem 19P
To determine

Find the project that would be approved if each project generates the same income.

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Attach a complete solution. Draw the cash flow diagram.Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional cost of P250,000 at the end of every 8 years. The annual operating costs will be P150,000 at the end of every year for the first 5 years and P200,000 thereafter. In addition there is expected to be recurring major rework cost of P500,000 every 13 years. Assume i=12%
Determine the capitalized cost of a research laboratory which requries P5,000,000 for original construction; P100,000 at the end of every year for the first 5 years and then P120,000 each year thereafter for operating expenses, and P500,000 every 6 years for replacement of equipment with interest at 12% per annum? a. 6441350 b. 6067015 c. 6632445 d. 6573650 e. none of the above
Find the answers of the following: 1. Mr. Reyes borrows P600,000 at 12% compounded annually agreeing to repay the loan in 15 equal annual payments. How much of the original principal is still unpaid after he has made the 8th payment? 2. The purchased price of the equipment is P12,000 and its estimated maintenance costs are P500 for the first year, P1,500 for the second year, and P2,500 for the third year. After three years of use the equipment is replaced, it has no salvage value. Compute the present equivalent cost of the equipment using 10% interest. (capitalized cost) 3. Determine the present worth and the accumulated amount of an annuity consisting of 6 payments of P120,000 each. The payment are made at the beginning of each year and money is worth 15% compounded annually.
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