Answered: Determine the Annual Worth of the…

Business

Accounting

Determine the Annual Worth of the investment using AW Method.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

PROBLEM: An investment is be made with an intial capital of PHP 759544. It is expected that there will be an annual revenue for this investment of PHP 469986; while it also entitled to an annual operationa nd mantenace cost of PHP 45691 and annual taxes of PHP 9045. Its salvage value at the end of its useful life (10 years) is PHP 18318. This investment has a MARR of 15% (same as interest rate).

QUESTION: Determine the Annual Worth of the investment using AW Method.

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