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For their replacements, the company is putting up a sinking fund to earn 16% interest compounded annually. If the money to purchase the ice cans is to be borrowed at 20% annually and the tax on the first cost is 2%, what is the difference in the annual cost of the two offers?

For their replacements, the company is putting up a sinking fund to earn 16% interest compounded annually. If the money to purchase the ice cans is to be borrowed at 20% annually and the tax on the first cost is 2%, what is the difference in the annual cost of the two offers?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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For its proposed expansion, an ice plant company is selecting from two offers of ice cans. The data on the offers are as follows: Offer A Offer B 1.8 mm thick 1.6mm thick Total Cost P720,000 P640,000 Annual Maintenance P60,000 P90,000 No. of years, Life 12 8 For their replacements, the company is putting up a sinking fund to earn 16% interest compounded annually. If the money to purchase the ice cans is to be borrowed at 20% annually and the tax on the first cost is 2%, what is the difference in the annual cost of the two offers? O P34,617.22 O P34,004.92 O P34,489.01 O P34,320.12
Transcribed Image Text:For its proposed expansion, an ice plant company is selecting from two offers of ice cans. The data on the offers are as follows: Offer A Offer B 1.8 mm thick 1.6mm thick Total Cost P720,000 P640,000 Annual Maintenance P60,000 P90,000 No. of years, Life 12 8 For their replacements, the company is putting up a sinking fund to earn 16% interest compounded annually. If the money to purchase the ice cans is to be borrowed at 20% annually and the tax on the first cost is 2%, what is the difference in the annual cost of the two offers? O P34,617.22 O P34,004.92 O P34,489.01 O P34,320.12
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