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n 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 ₱96.00 per year per square meter. A two-inch insulation will cost ₱30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost ₱65.00 per square meter. Using a 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? USE RATE OF RETURN ON ADDITIONAL INVESTMENT METHOD

n 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 ₱96.00 per year per square meter. A two-inch insulation will cost ₱30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost ₱65.00 per square meter. Using a 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? USE RATE OF RETURN ON ADDITIONAL INVESTMENT METHOD

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 ₱96.00 per year per square meter. A two-inch insulation will cost ₱30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost ₱65.00 per square meter. Using a 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? USE RATE OF RETURN ON ADDITIONAL INVESTMENT METHOD

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