In the choice of mechanical equipment you are required to submit your recommendation as to which of the two steam shovels for earth excavation is better to buy. The basis is 20 year service and interest at 7%. Taxes and insurance are the same in each case: 5% & 1% respectively. Use Annual Cost to determine 50-ton shovel. 50-ton shovel 70 ton shovel First Cost P30k P38k Life 20 years 20 years Salvage value P2k P3k Annual Operation P15k P17k Annual Upkeep P1.5k P2k Annual Output 150k yards3 200k yards3
In the choice of mechanical equipment you are required to submit your recommendation as to which of the two steam shovels for earth excavation is better to buy. The basis is 20 year service and interest at 7%. Taxes and insurance are the same in each case: 5% & 1% respectively. Use Annual Cost to determine 50-ton shovel. 50-ton shovel 70 ton shovel First Cost P30k P38k Life 20 years 20 years Salvage value P2k P3k Annual Operation P15k P17k Annual Upkeep P1.5k P2k Annual Output 150k yards3 200k yards3
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In the choice of mechanical equipment you are required to submit your recommendation as to which of the two steam shovels for earth excavation is better to buy. The basis is 20 year service and interest at 7%. Taxes and insurance are the same in each case: 5% & 1% respectively. Use Annual Cost to determine 50-ton shovel.
|
50-ton shovel |
70 ton shovel |
First Cost |
P30k |
P38k |
Life |
20 years |
20 years |
Salvage value |
P2k |
P3k |
Annual Operation |
P15k |
P17k |
Annual Upkeep |
P1.5k |
P2k |
Annual Output |
150k yards3 |
200k yards3 |
a. P21,803.002
b. P12,083.002
c. P21,083.002
d. P21,380.002
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