A Civil Engineer is considering establishing his own company. An investment of P4,000,000 will be required, which will be recovered in 15 years. It is estimated that revenue will be P8,000,000 per year and that operating expenses will be as follows: Materials P1,600,000 per year Labor P2,800,000 per year Overhead P400,000 + 10% of the yearly revenue Other expenses P600,000 per year The engineer will give up his regular job paying P2,160,000 per year and devote his time fulltime to the operation of the business; this will result in decreasing labor cost by P400,000 per year, material cost by P280,000 per year and overhead cost by P320,000 per year. If the man expects to earn at least 20% of

A Civil Engineer is considering establishing his own company. An investment of P4,000,000 will be required, which will be recovered in 15 years. It is estimated that revenue will be P8,000,000 per year and that operating expenses will be as follows: Materials P1,600,000 per year Labor P2,800,000 per year Overhead P400,000 + 10% of the yearly revenue Other expenses P600,000 per year The engineer will give up his regular job paying P2,160,000 per year and devote his time fulltime to the operation of the business; this will result in decreasing labor cost by P400,000 per year, material cost by P280,000 per year and overhead cost by P320,000 per year. If the man expects to earn at least 20% of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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