Acer Philippines, a Taiwanese multinational hardware and electronics corporation specializing in advanced electronics technology, sells computers has proposed to a small public utility company that it purchase a small electronic computer for P1,500,000 to replace the ten calculating machines and their operators. An annual service maintenance contract for the computer will be provided at a cost of P150,000 per years. One operator will be required at a salary of P96,000 per year and one programmer at a salary of P145,000 per year. The estimated economical life of the computer is 10 years. The calculating machine costs P7,000 each when new, 5 years ago, and presently can be sold for P2,500 each. They have an estimated life of 8 years and an estimated ultimate trade in value of P1200 each. Each calculating machine operator receives P85,000 per year. Annual maintenance costs on the calculating machines have been P600 each. Taxes and insurance on all equipment is 3% of the first cost per year. If the capital costs the company about 25%, using the rate of return on additional investment would you recommend the computer installation?
Acer Philippines, a Taiwanese multinational hardware and electronics corporation specializing in advanced electronics technology, sells computers has proposed to a small public utility company that it purchase a small electronic computer for P1,500,000 to replace the ten calculating machines and their operators. An annual service maintenance contract for the computer will be provided at a cost of P150,000 per years. One operator will be required at a salary of P96,000 per year and one programmer at a salary of P145,000 per year. The estimated economical life of the computer is 10 years. The calculating machine costs P7,000 each when new, 5 years ago, and presently can be sold for P2,500 each. They have an estimated life of 8 years and an estimated ultimate trade in value of P1200 each. Each calculating machine operator receives P85,000 per year. Annual maintenance costs on the calculating machines have been P600 each. Taxes and insurance on all equipment is 3% of the first cost per year. If the capital costs the company about 25%, using the rate of
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