A new engine can be created using either of two methods. Process A will cost P750,000 to start up, P60,000 to operate each year, and P80,000 to salvage at the end of its two-year life. Process B will cost P1,350,000 initially, P25,000 annually, and have a P120,000 salvage value after a 4-year lifespan. At the end of year 2, Process B will also need updating, which will cost P90,000. Write the following on the basis of a future worth analysis with a 12% annual interest rate: A: Blank 1 B: Blank
A new engine can be created using either of two methods. Process A will cost P750,000 to start up, P60,000 to operate each year, and P80,000 to salvage at the end of its two-year life. Process B will cost P1,350,000 initially, P25,000 annually, and have a P120,000 salvage value after a 4-year lifespan. At the end of year 2, Process B will also need updating, which will cost P90,000. Write the following on the basis of a future worth analysis with a 12% annual interest rate: A: Blank 1 B: Blank
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A new engine can be created using either of two methods. Process A will cost P750,000 to start up, P60,000 to operate each year, and P80,000 to salvage at the end of its two-year life. Process B will cost P1,350,000 initially, P25,000 annually, and have a P120,000 salvage value after a 4-year lifespan. At the end of year 2, Process B will also need updating, which will cost P90,000. Write the following on the basis of a future worth analysis with a 12% annual interest rate:
A: Blank 1
B: Blank 2
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