A company is producing paper cups and they supply a number of restaurants and fast food companies. But the machine they are using is old and frequent down time is being experienced that affected their scheduled deliveries to their customers. The maintenance engineer has these two options to study and provide to the top management which among from the options at hand is more viable and would give at least the financial benefit over the other. Option A: Maintain the machine with an initial cost of overhauling of P850,000.00. Yearly maintenance cost of P1,200,000.00. And an upgrade cost of P50,000.00 every 6 years. Option B: There is a subcontractor that has the same machines has offered to provide them subcontracting services with this terms. An initial contract cost of P1,000,000.00 and a yearly service fee of P800,000.00. Money is worth, 0.11 per annum. Do not include commas in typing. Your answer in the answer box should be the capitalized cost in pesos of the option A or B, which you think would give benefit to the company. So the answer is still numerical you don't need to include the letters A or B.
A company is producing paper cups and they supply a number of restaurants and fast food companies. But the machine they are using is old and frequent down time is being experienced that affected their scheduled deliveries to their customers.
The maintenance engineer has these two options to study and provide to the top management which among from the options at hand is more viable and would give at least the financial benefit over the other.
Option A: Maintain the machine with an initial cost of overhauling of P850,000.00. Yearly maintenance cost of P1,200,000.00. And an upgrade cost of P50,000.00 every 6 years.
Option B: There is a subcontractor that has the same machines has offered to provide them subcontracting services with this terms. An initial contract cost of P1,000,000.00 and a yearly service fee of P800,000.00.
Money is worth, 0.11 per annum.
Do not include commas in typing.
Your answer in the answer box should be the capitalized cost in pesos of the option A or B, which you think would give benefit to the company. So the answer is still numerical you don't need to include the letters A or B.
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