A food manufacturing company intends to make a new product. However, its present facilities are inadequate. On its present site, land is available for a new building which will cost P800,000, and the necessary equipment installed will cost P420,000. The building and equipment are expected to have a total salvage value of P360,000 at the end of 10yrs. The average annual income from the new product is expected to be P550,000 and the annual disbursements for materials, labor and all other expenses are estimated to be P310,000. If the company requires a minimum return of 12% from this product, using rate of return method, should it invest capital in the new product? Note: show the complete solution and not the excel type of solution
A food manufacturing company intends to make a new product. However, its present facilities are inadequate. On its present site, land is available for a new building which will cost P800,000, and the necessary equipment installed will cost P420,000. The building and equipment are expected to have a total salvage value of P360,000 at the end of 10yrs. The average annual income from the new product is expected to be P550,000 and the annual disbursements for materials, labor and all other expenses are estimated to be P310,000. If the company requires a minimum return of 12% from this product, using
Note: show the complete solution and not the excel type of solution
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