A wood post initially costs P 25, 000 with an installation and miscellaneous expenses of P 7, 500 before operation. It is expected to last for twenty years with an annual maintenance of P 2, 750 and a scrap value of P 1, 500. A concrete post can be an alternative with an initial cost and other expenses before operation doubled than that

A wood post initially costs P 25, 000 with an installation and miscellaneous expenses of P 7, 500 before operation. It is expected to last for twenty years with an annual maintenance of P 2, 750 and a scrap value of P 1, 500. A concrete post can be an alternative with an initial cost and other expenses before operation doubled than that

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Draw a cash-flow diagram if necessary
2) A wood post inialy costs P 25,000 ith an installation and miscellaneous expenses of
P7, 500 before operation. It is expected to last for twenty years with an annual
maintenance of P 2, 750 and a scrap value of P 1, 500. A concrete post can be an
alternative with an initial cost and other expenses before operation doubled than that
of the first cost of the wood post. However, concrete post does not need annual
maintenance and has a scrap value of P 3, 500 before replacement. If the capitalized
cost of the concrete post is 15% higher than that of the wood post, approximately how
many years will he concrete post lasts? Money is 12% compounded monthly.

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Step 3: Calculation of capitalized cost of concrete post:

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Step 4: Calculation of life of concrete post:

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