3. The Hope Foundation is planning to put up its own building. There are two proposals that are being considered: Proposal 1: The construction of the building now, to cost P8,000,000.00. Proposal 2: The construction of a smaller building now, to cost P6,000,000.00 and at the end of 5 years, an extension to be added to cost P4,000,000.00. If the interest rate is 20%, which proposal is more economical and by how much? Neglect depreciation.
3. The Hope Foundation is planning to put up its own building. There are two proposals that are being considered: Proposal 1: The construction of the building now, to cost P8,000,000.00. Proposal 2: The construction of a smaller building now, to cost P6,000,000.00 and at the end of 5 years, an extension to be added to cost P4,000,000.00. If the interest rate is 20%, which proposal is more economical and by how much? Neglect depreciation.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:3. The Hope Foundation is planning to put up its own building. There are two proposals that are being
considered:
Proposal 1: The construction of the building now, to cost P8,000,000.00.
Proposal 2: The construction of a smaller building now, to cost P6,000,000.00 and at the end of 5
years, an extension to be added to cost P4,000,000.00.
If the interest rate is 20%, which proposal is more economical and by how much? Neglect
depreciation.
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