LEIS company is planning to borrow P10.5M for a company expansion and is not sure what the interest rate will be when it applies for the loan. The rate could be as low as 10% per year or as high as 12% per year for a 5-year loan. LEIS company will only move forward with the project if the annual worth of the expansion is below P5.7M. The maintenance and operation cost is P3.1M per year. The salvage value could be P2M if the interest rate is 10% or P2.5M if it is 12% per year. Use annual worth method to determine the value of each option ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2 Blank 1 Add your answer Blank 2 Add your answer

LEIS company is planning to borrow P10.5M for a company expansion and is not sure what the interest rate will be when it applies for the loan. The rate could be as low as 10% per year or as high as 12% per year for a 5-year loan. LEIS company will only move forward with the project if the annual worth of the expansion is below P5.7M. The maintenance and operation cost is P3.1M per year. The salvage value could be P2M if the interest rate is 10% or P2.5M if it is 12% per year. Use annual worth method to determine the value of each option ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2 Blank 1 Add your answer Blank 2 Add your answer

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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