civil engineer presently receives a monthly salary of P80,000.00. His invested savings  earn 14%.  Ever inspired by the adage  “it is better to be a head of a rat than to be a tail of a lion,” he  entertained  an alternative investment whereby he expected to realize a 20% return on investment and which at the same time shall  comparatively  assure him the  enjoyment of his  present perks benefits.  Such alternative investment involves the procurement of various equipment and the manufacture of new construction materials.  The following are the  relevant  yearly  projected data:                        Total Revenue ----------------------------------------P10,000,000.000                        Total Depreciation     ---   P 1,000,000.00                        Raw Materials            ---       3,300,000.00                          Labor Costs                 ---       1,500,000.00              Other Expenses         ---       1,200,000.00

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
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  1.  A civil engineer presently receives a monthly salary of P80,000.00. His invested savings  earn 14%.  Ever inspired by the adage  “it is better to be a head of a rat than to be a tail of a lion,” he  entertained  an alternative investment whereby he expected to realize a 20% return on investment and which at the same time shall  comparatively  assure him the  enjoyment of his  present perks benefits.  Such alternative investment involves the procurement of various equipment and the manufacture of new construction materials.  The following are the  relevant  yearly  projected data:
                       Total Revenue ----------------------------------------P10,000,000.000
                       Total Depreciation     ---   P 1,000,000.00
                       Raw Materials            ---       3,300,000.00  
                       Labor Costs                 ---       1,500,000.00
             Other Expenses         ---       1,200,000.00        
 
Should he  pursue the Alternative? Briefly Explain.  
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