A construction company in Manila will bid on the digging of an irrigation canal in a nearby province which measures 2 meters wide, 1 meter deep, and 2 km long. Twenty laborers will be employed at P120.00 each per day, and they can dig on an average of 1/2 cu.m. per hour. In addition, 2 foremen will also be employed

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
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A construction company in Manila will bid on the digging of an
irrigation canal in a nearby province which measures 2 meters
wide, 1 meter deep, and 2 km long. Twenty laborers will be
employed at P120.00 each per day, and they can dig on an average
of 1/2 cu.m. per hour. In addition, 2 foremen will also be employed
at P250.00 each per day.
A ditch-digging machine may be rented at a cost of P750 a day, in
actual use and in transit to and from the construction site. In
actual use, fuel and oil will cost P280 a day. It takes one day, each
way, for transporting the machine. Freight charges for
transporting the machine will be P1,200 each way. The machine
operator accompanies the machine and is paid P280 each day. The
services of 2 laborers would also be needed, in addition to the
services of the machine. The machine can dig 1 cu.m. every 4
minutes.
Allowing P20,000 for profit and contingencies, determine the
lowest bid price of the company.
Transcribed Image Text:A construction company in Manila will bid on the digging of an irrigation canal in a nearby province which measures 2 meters wide, 1 meter deep, and 2 km long. Twenty laborers will be employed at P120.00 each per day, and they can dig on an average of 1/2 cu.m. per hour. In addition, 2 foremen will also be employed at P250.00 each per day. A ditch-digging machine may be rented at a cost of P750 a day, in actual use and in transit to and from the construction site. In actual use, fuel and oil will cost P280 a day. It takes one day, each way, for transporting the machine. Freight charges for transporting the machine will be P1,200 each way. The machine operator accompanies the machine and is paid P280 each day. The services of 2 laborers would also be needed, in addition to the services of the machine. The machine can dig 1 cu.m. every 4 minutes. Allowing P20,000 for profit and contingencies, determine the lowest bid price of the company.
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