1. A machine has been purchased and installed at a total cost P18,000.00. The machine will be retired at the end of 5 years, at which time it is expected to have a scrap value of P2,000.00 based on current prices. The machine will them be replaced with an exact duplicate. The company plans to establish a reserve funds to accumulate the capital needed to replace the machine. If an average annual rate of inflation of 3% in anticipated, how much capital must be accumulated?

1. A machine has been purchased and installed at a total cost P18,000.00. The machine will be retired at the end of 5 years, at which time it is expected to have a scrap value of P2,000.00 based on current prices. The machine will them be replaced with an exact duplicate. The company plans to establish a reserve funds to accumulate the capital needed to replace the machine. If an average annual rate of inflation of 3% in anticipated, how much capital must be accumulated?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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