7. A new engine was installed by a textile plant at a cost of P300 000 and projected to have a useful life of 15 years at the end of its useful life, it is estimated to have a salvage value of P30 000. Determine its capitalized cost if interest is 18% compounded annually?

7. A new engine was installed by a textile plant at a cost of P300 000 and projected to have a useful life of 15 years at the end of its useful life, it is estimated to have a salvage value of P30 000. Determine its capitalized cost if interest is 18% compounded annually?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cash Flow in Engineering Economics (Interest and Equivalence)

The cash flows of a firm are of two categories such as cash inflows and cash outflows. Cash inflow is the money or income entering a firm during a specific period whereas cash outflow is the money exiting a firm during a specific period in the form of the expenses incurred by the firm. In other words, we can say that cash flow is a series of expenses and credits that run over the project over the lifetime it existed whereas cash inflows are all the income and gains the company earns as a result of its operations.

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7. A new engine was installed by a textile plant at a cost of P300 000 and projected to have a useful life of
15 years at the end of its useful life, it is estimated to have a salvage value of P30 000. Determine its
capitalized cost if interest is 18% compounded annually? *

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