Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If the annual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000. First Cost Present worth of the annual maintenance cost *Letters only Perpetuity of the depreciation cost Capitalized cost a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700 a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700
Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If the annual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000. First Cost Present worth of the annual maintenance cost *Letters only Perpetuity of the depreciation cost Capitalized cost a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700 a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A
machine costs P300,000 new, and must be replaced at the end of each 15 years. If the annual maintenance required is P5,000, find the
capitalized cost, if money is worth 5% and the salvage value is P50,000.
First Cost
Present worth of the annual maintenance cost
*Letters only
Perpetuity of the depreciation cost
Capitalized cost
a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700
a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700
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