3.1 what is the amount needed today using mild steel? 3.2 what should the useful life of the stainless reactor be so that the capitalized cost are equal?
A chemical reactor, which will contain corrosive liquids has been designed. The reactor may
be made of mild steel or stainless steel. The initial cost, including installation, of a mild steel reactor is
expected to be P72,000 and would last 5 years. Stainless steel is more resistant to the corrosive action of
the liquids, but is more expensive and will cost P120,000. Assuming that both types of reactors will have no
salvage or scrap value at the end of their useful lives and could be replaced at the same costs as before,
and if money is worth 7.5% compounded annually,
3.1 what is the amount needed today using mild steel?
3.2 what should the useful life of the stainless reactor be so that the capitalized cost are equal?
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