A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. Using present worth cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2
A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. Using present worth cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![A start up business is considering two types of equipment - data are as follows:
TYPE A
ΤΥΡE Β
First Cost
P200,000.00
P300,000.00
Annual operating cost
32,000.00
24,000.00
Annual labor cost
50,000.00
32,000.00
Insurance and property taxes
3%
3%
Payroll taxes
4%
4%
Estimated life
10
10
The minimum required rate of return is 15%.
Using present worth cost method, determine the value of alternative A and alternative B:
ANSWER for ALTERNATIVE A: Blank 1
ANSWER for ALTERNATIVE B: Blank 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54e8a342-347e-42a8-a11b-e4dfc8beb592%2F74d06252-9be7-4ab1-97d4-c6b5be7c0b67%2Ftt85r2_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A start up business is considering two types of equipment - data are as follows:
TYPE A
ΤΥΡE Β
First Cost
P200,000.00
P300,000.00
Annual operating cost
32,000.00
24,000.00
Annual labor cost
50,000.00
32,000.00
Insurance and property taxes
3%
3%
Payroll taxes
4%
4%
Estimated life
10
10
The minimum required rate of return is 15%.
Using present worth cost method, determine the value of alternative A and alternative B:
ANSWER for ALTERNATIVE A: Blank 1
ANSWER for ALTERNATIVE B: Blank 2
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