In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches in insulating the walls of the cold storage warehouse. Heat absorbed through the walls without insulation would cost P96.00 per year per square meter. Two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. Three-inch insulation will cut out92% of the loss and will cost P65.00 per square meter. Using life of 15 years for the insulation     with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches in insulating the walls of the cold storage warehouse. Heat absorbed through the walls without insulation would cost P96.00 per year per square meter. Two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. Three-inch insulation will cut out92% of the loss and will cost P65.00 per square meter. Using life of 15 years for the insulation
 
 
with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?
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