A Diesel power plant located in Subic, Pampanga, is wanting to acquire a new generator set for the plant to replace the unit that they currently use. The new set has an amount of P200,000 which can last up to 5 years and no salvage value. It has production cost of P175,000. The present generator set they have still has a life of 5 remaining years out of the 10 years of its useful life with a salvage value of P12,000. Its current value can be computed by Straight Line Method. Its original cost is P230,000 that has a production cost of P180,000. If money is worth 10%, what would you suggest? Use AC method.
A Diesel power plant located in Subic, Pampanga, is wanting to acquire a new generator set for the plant to replace the unit that they currently use. The new set has an amount of P200,000 which can last up to 5 years and no salvage value. It has production cost of P175,000. The present generator set they have still has a life of 5 remaining years out of the 10 years of its useful life with a salvage value of P12,000. Its current value can be computed by Straight Line Method. Its original cost is P230,000 that has a production cost of P180,000. If money is worth 10%, what would you suggest? Use AC method.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A Diesel power plant located in Subic, Pampanga, is wanting to acquire a new generator set for the plant to replace the unit that they currently use. The new set has an amount of P200,000 which can last up to 5 years and no salvage value. It has production cost of P175,000. The present generator set they have still has a life of 5 remaining years out of the 10 years of its useful life with a salvage value of P12,000. Its current value can be computed by Straight Line Method. Its original cost is P230,000 that has a production cost of P180,000. If money is worth 10%, what would you suggest? Use AC method.
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