4) Two installations are being considered to provide for water storage in a chemical plant. Atank on a tower or a tank of equal capacity placed on a hill some distance from the plant. Thecost of installing the tank and tower is estimated at P350,000. The cost of installing the tank onthe hill, including the extra length of service lines, is estimated at P300,000. The hill installation willrequire an additional investment of P30,000 in pumping equipment whose life is estimated to be15 years with a salvage value of P2,500. The life of the two installations is estimated to be 30years. Annual cost of labor, electricity, and maintenance incident to the pumping equipment isestimated at P3,000. Taxes and insurance for both are 2.5% of the first cost. Money is worth 18%effective. Which alternative should be used? (USE PW and EUAC) ;

The evaluation of costs and benefits is at the heart of economic analysis. To help with resource…

4) Two installations are being considered to provide for water storage in a chemical plant. A tank on a tower or a tank of equal capacity placed on a hill some distance from the plant. The cost of installing the tank and tower is estimated at P350,000. The cost of installing the tank on the hill, including the extra length of service lines, is estimated at P300,000. The hill installation will equire an additional investment of P30,000 in pumping equipment whose life is estimated to be 15 years with a salvage value of P2,500. The life of the two installations is estimated to be 30 years. Annual cost of labor, electricity, and maintenance incident to the pumping equipment is estimated at P3,000. Taxes and insurance for both are 2.5% of the first cost. Money is worth 18% effective. Which alternative should be used? (USE PW and EUAC);

4) Two installations are being considered to provide for water storage in a chemical plant. A tank on a tower or a tank of equal capacity placed on a hill some distance from the plant. The cost of installing the tank and tower is estimated at P350,000. The cost of installing the tank on the hill, including the extra length of service lines, is estimated at P300,000. The hill installation will equire an additional investment of P30,000 in pumping equipment whose life is estimated to be 15 years with a salvage value of P2,500. The life of the two installations is estimated to be 30 years. Annual cost of labor, electricity, and maintenance incident to the pumping equipment is estimated at P3,000. Taxes and insurance for both are 2.5% of the first cost. Money is worth 18% effective. Which alternative should be used? (USE PW and EUAC);

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

4) Two installations are being considered to provide for water storage in a chemical plant. A
tank on a tower or a tank of equal capacity placed on a hill some distance from the plant. The
cost of installing the tank and tower is estimated at P350,000. The cost of installing the tank on
the hill, including the extra length of service lines, is estimated at P300,000. The hill installation will
require an additional investment of P30,000 in pumping equipment whose life is estimated to be
15 years with a salvage value of P2,500. The life of the two installations is estimated to be 30
years. Annual cost of labor, electricity, and maintenance incident to the pumping equipment is
estimated at P3,000. Taxes and insurance for both are 2.5% of the first cost. Money is worth 18%
effective. Which alternative should be used? (USE PW and EUAC) ;

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am. 137.
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