6. The production manager of a manufacturing plant figured that by installing four 15- KVAR power condensers the power factor will increase by 20%, resulting in a monthly power savings of P7700.00 Each unit costs P75 000.00 with a 10% salvage value after 10 years. The overall cost of installation is P14 000.00, and the estimated annual cost of maintenance and taxes is P11 800.00. If a 9% sinking fund formula is applied for depreciation, determine the payback period for the condensers. (Ans. 5 years)
6. The production manager of a manufacturing plant figured that by installing four 15- KVAR power condensers the power factor will increase by 20%, resulting in a monthly power savings of P7700.00 Each unit costs P75 000.00 with a 10% salvage value after 10 years. The overall cost of installation is P14 000.00, and the estimated annual cost of maintenance and taxes is P11 800.00. If a 9% sinking fund formula is applied for depreciation, determine the payback period for the condensers. (Ans. 5 years)
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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6. The production manager of a manufacturing plant figured that by installing four 15- KVAR power condensers the power factor will increase by 20%, resulting in a monthly power savings of P7700.00 Each unit costs P75 000.00 with a 10% salvage value after 10 years. The overall cost of installation is P14 000.00, and the estimated annual cost of maintenance and taxes is P11 800.00. If a 9% sinking fund formula is applied for
(Ans. 5 years)
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