Two companies produce motors that are rated 50-hp and are presented as alternatives.Arrow Motors produces this kind of motor at Php 37,500 and has a useful life of 10 years. Annually it willrequire maintenance and it will cost Php 1,500. The machine is assumed 87% efficient for the whole of itsuseful life. Taxes and insurance are at 3%.Bailey Motors produces this kind of motor at Php 48,000 and has a useful life of 10 years. Annually it willrequire maintenance and it will cost Php 750. The machine is assumed 87% efficient for the whole of its usefullife. Taxes and insurance are at 3%.The cost of electricity is Php 2.00 per kWh. How many hours a year will the motors have to be run at full loadto be similarly economical if money is worth 20%?

Given information Cost of electricity is Php 2 per kwh Particular Company A Company B Cost…

Answered: Bailey Motors produces this kind of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A certain company has the following maintenance cost for all of its machine. On the first 5 years, the company needs P100,000 per year and on the next 7 years he company needs P250,000 per year. How much will the company pay in total if they are going to pay all these costs today? Interest for the whole duration is 10% compounded monthly.

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