At present, a foundation who has 6 million deposit in bank with interest of 10% compounded annually, is planning to build a project that will last for a long period of time. The project will require an initial cost of P8.5 million four years from now, annual maintenance would be P200,000 for the first 5 years and will increase by P10,000 every year for the next 10 years and then the maintenance will be P300,000 per year for the rest of its life. Major repair is estimated to be P1.5 million every 8 years to start 10 years after construction. Determine the amount to be deposited at the end of each year for five years, starting three years from now, to sustain the cost of the project.

At present, a foundation who has 6 million deposit in bank with interest of 10% compounded annually, is planning to build a project that will last for a long period of time. The project will require an initial cost of P8.5 million four years from now, annual maintenance would be P200,000 for the first 5 years and will increase by P10,000 every year for the next 10 years and then the maintenance will be P300,000 per year for the rest of its life. Major repair is estimated to be P1.5 million every 8 years to start 10 years after construction. Determine the amount to be deposited at the end of each year for five years, starting three years from now, to sustain the cost of the project.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...

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