1. Four years ago, an ore-crushing unit was installed at a mine which cost Php81,000. Annual operating costs for this unit is Php3,540. This unit was estimated to have a life of 10 years. The quantity of ore to be handled is to be doubled and is expected to continue at this higher rate for at least 10 years. A unit that will handle the same quantity of ore and have the same operating costs as the one now in service can be installed for Php75,000. This unit will have a useful life of 6 years. A unit with double the capacity of the one now in use can be installed for Php112,000. Its life is estimated at 6 years and its annual operating costs are estimated at Php4,950. The present realizable value of the unit now in use is Php26,000. All units under consideration will have an estimated salvage value at retirement age of 12% of the original cost. Interest rate is 20%. Annual taxes and insurance are 2.5% of the original cost. What would you recommend?
1. Four years ago, an ore-crushing unit was installed at a mine which cost Php81,000. Annual operating costs for this unit is Php3,540. This unit was estimated to have a life of 10 years. The quantity of ore to be handled is to be doubled and is expected to continue at this higher rate for at least 10 years. A unit that will handle the same quantity of ore and have the same operating costs as the one now in service can be installed for Php75,000. This unit will have a useful life of 6 years. A unit with double the capacity of the one now in use can be installed for Php112,000. Its life is estimated at 6 years and its annual operating costs are estimated at Php4,950. The present realizable value of the unit now in use is Php26,000. All units under consideration will have an estimated salvage value at retirement age of 12% of the original cost. Interest rate is 20%. Annual taxes and insurance are 2.5% of the original cost. What would you recommend?
Elements Of Electromagnetics
7th Edition
ISBN:9780190698614
Author:Sadiku, Matthew N. O.
Publisher:Sadiku, Matthew N. O.
ChapterMA: Math Assessment
Section: Chapter Questions
Problem 1.1MA
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![1. Four years ago, an ore-crushing unit was installed at a mine which cost
Php81,000. Annual operating costs for this unit is Php3,540. This unit was
estimated to have a life of 10 years. The quantity of ore to be handled is to be
doubled and is expected to continue at this higher rate for at least 10 years. A
unit that will handle the same quantity of ore and have the same operating costs
as the one now in service can be installed for Php75,000. This unit will have a
useful life of 6 years.
A unit with double the capacity of the one now in use can be installed for
Php112,000. Its life is estimated at 6 years and its annual operating costs are
estimated at Php4,950. The present realizable value of the unit now in use is
Php26,000. All units under consideration will have an estimated salvage value at
retirement age of 12% of the original cost. Interest rate is 20%. Annual taxes and
insurance are 2.5% of the original cost.
What would you recommend?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcece09e2-c29d-435b-98e7-64d87b5bcec9%2Fb2e05713-4f0f-4e61-9e50-8392e9795cff%2Fy8jwl1.jpeg&w=3840&q=75)
Transcribed Image Text:1. Four years ago, an ore-crushing unit was installed at a mine which cost
Php81,000. Annual operating costs for this unit is Php3,540. This unit was
estimated to have a life of 10 years. The quantity of ore to be handled is to be
doubled and is expected to continue at this higher rate for at least 10 years. A
unit that will handle the same quantity of ore and have the same operating costs
as the one now in service can be installed for Php75,000. This unit will have a
useful life of 6 years.
A unit with double the capacity of the one now in use can be installed for
Php112,000. Its life is estimated at 6 years and its annual operating costs are
estimated at Php4,950. The present realizable value of the unit now in use is
Php26,000. All units under consideration will have an estimated salvage value at
retirement age of 12% of the original cost. Interest rate is 20%. Annual taxes and
insurance are 2.5% of the original cost.
What would you recommend?
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