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2. A machine costs P20,000 and has a salvage value of P2,000 aifter a useful life of 8 years. Money is worth 12%. If average inflation is 8% per year during this period, what is the annual cost of depreciation to replace the machine after 8 years? What is the annual cost of depreciation if inflation is not considered?

2. A machine costs P20,000 and has a salvage value of P2,000 aifter a useful life of 8 years. Money is worth 12%. If average inflation is 8% per year during this period, what is the annual cost of depreciation to replace the machine after 8 years? What is the annual cost of depreciation if inflation is not considered?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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2. A machine costs P20,000 and has a salvage value of P2,000 after a useful life of 8 years. Money is worth 12%. If average inflation is 8% per year during this period, what is the annual cost of depreciation to replace the machine after 8 years? What is the annual cost of depreciation if inflation is not considered?
Transcribed Image Text:2. A machine costs P20,000 and has a salvage value of P2,000 after a useful life of 8 years. Money is worth 12%. If average inflation is 8% per year during this period, what is the annual cost of depreciation to replace the machine after 8 years? What is the annual cost of depreciation if inflation is not considered?
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