A firm is charged P150 per ton for hauling its raw materials by a trucking company. Forty tons per day are hauled for 300 days a year. It is a desired to install a railway system which would bring down the cost of,hauling to P6.60 per ton. Maintenance cost of this is P12,000 per month. Tax is 1%. Average rate of earning is 20%. (a) If the company has the cash necessary for the installation would you recommend the change? (b) If the company has to float P5,000,000 worth of non callable bonds at 15% that will mature in 10 years to have the capital. for the project, would you recommend the change?

A firm is charged P150 per ton for hauling its raw materials by a trucking company. Forty tons per day are hauled for 300 days a year. It is a desired to install a railway system which would bring down the cost of,hauling to P6.60 per ton. Maintenance cost of this is P12,000 per month. Tax is 1%. Average rate of earning is 20%. (a) If the company has the cash necessary for the installation would you recommend the change? (b) If the company has to float P5,000,000 worth of non callable bonds at 15% that will mature in 10 years to have the capital. for the project, would you recommend the change?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 30P

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