A company that sells has proposed to a small public utility company that it purchase a small electronics computer for ₱1,000,000 to replace ten calculating machines and their operators. An annual service maintenance contract for the computer will be provided at a cost of ₱100, 000 per year. One operator will be required at a salary of ₱110, 000 per year and one programmer at a salary of ₱160, 000. The estimated economical life of the computer is 10 years. The calculating machines costs ₱8,000 each when new, 5 years ago, and presently can be sold for ₱2,000 each. They have an estimated life of 8 years and an expected ultimate trade in value of ₱1, 000 each. Each calculating machine operator receives ₱85, 000 per year. Fringe Benefits for all labour cost 8% of annual salary. Annual maintenance cost on the calculating machine has been ₱500 each. Taxes and insurance on all equipment is 2% of the first cost per year. If capital costs the company about 25%, would you recommend the computer installation?
A company that sells has proposed to a small public utility company that it purchase a small electronics computer for ₱1,000,000 to replace ten calculating machines and their operators. An annual service maintenance contract for the computer will be provided at a cost of ₱100, 000 per year. One operator will be required at a salary of ₱110, 000 per year and one programmer at a salary of ₱160, 000. The estimated economical life of the computer is 10 years. The calculating machines costs ₱8,000 each when new, 5 years ago, and presently can be sold for ₱2,000 each. They have an estimated life of 8 years and an expected ultimate trade in value of ₱1, 000 each. Each calculating machine operator receives ₱85, 000 per year. Fringe Benefits for all labour cost 8% of annual salary. Annual maintenance cost on the calculating machine has been ₱500 each. Taxes and insurance on all equipment is 2% of the first cost per year. If capital costs the company about 25%, would you recommend the computer installation?
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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A company that sells has proposed to a small public utility company that it purchase a
small electronics computer for ₱1,000,000 to replace ten calculating machines and their
operators. An annual service maintenance contract for the computer will be provided at a
cost of ₱100, 000 per year. One operator will be required at a salary of ₱110, 000 per year
and one programmer at a salary of ₱160, 000. The estimated economical life of the
computer is 10 years.
The calculating machines costs ₱8,000 each when new, 5 years ago, and presently can
be sold for ₱2,000 each. They have an estimated life of 8 years and an expected ultimate
trade in value of ₱1, 000 each. Each calculating machine operator receives ₱85, 000 per
year.
the calculating machine has been ₱500 each. Taxes and insurance on all equipment is
2% of the first cost per year.
If capital costs the company about 25%, would you recommend the computer installation?
Transcribed Image Text:4. A company that sells has proposed to a small public utility company that it purchase a
small electronics computer for P1,000,000 to replace ten calculating machines and their
operators. An annual service maintenance contract for the computer will be provided at a
cost of P100, 000 per year. One operator will be required at a salary of P110, 000 per year
and one programmer at a salary of P160, 000. The estimated economical life of the
computer is 10 years.
The calculating machines costs P8,000 each when new, 5 years ago, and presently can
be sold for P2,000 each. They have an estimated life of 8 years and an expected ultimate
trade in value of P1, 000 each. Each calculating machine operator receives P85, 000 per
year. Fringe Benefits for all labour cost 8% of annual salary. Annual maintenance cost on
the calculating machine has been P500 each. Taxes and insurance on all equipment is
2% of the first cost per year.
If capital costs the company about 25%, would you recommend the computer installation?
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