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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Question
Transcribed Image Text:1. A company is planning to acquire vehicles for its engineer by buying brand new car and then
replacing them every 4 years up to a period of 20 years. The old cars have trade-in value of
P300,000.00 at the end of 4 years with a replacement cost of P500,000.00. Annual operating costs
including depreciation are estimated P50,000.00. The fund is to invested at 8% compounded
annually and should have an excess balance of P150,000.00 at the end of 20 years for emergency
fund. Determine the amount needed to push through with the project.
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