firm is considering purchasing equipment that will reduce costs by P40,000. The equipment costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual maintenance cost is P6,000. While not in use by the firm, the equipment can be rented to others to generate an income of P10,000 per year. If money can be invested for an 8% return, is the firm justified in buying the equipment? Use present worth metho
firm is considering purchasing equipment that will reduce costs by P40,000. The equipment costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual maintenance cost is P6,000. While not in use by the firm, the equipment can be rented to others to generate an income of P10,000 per year. If money can be invested for an 8% return, is the firm justified in buying the equipment? Use present worth metho
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 firm is considering purchasing equipment that will reduce costs by P40,000. The equipment costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual maintenance cost is P6,000. While not in use by the firm, the equipment can be rented to others to generate an income of P10,000 per year. If money can be invested for an 8% return, is the firm justified in buying the equipment? Use present worth method
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