Q1: A company is going to install a new asphalt plants. Three different type of plants are available. The essential differences in first cost, salvage value and expenditures are shown below. Asphalt Plant types (proposals) Speedy Investment cost (million IQD) Useful life (year) 100 Annual disbursement(million IQD) Salvage value (millionIQD) 10 50 20 Each plants will produce the same quantity of asphalt. Any capital invested in this company is expected to earn at least (10%) (before income taxes). Which plants should be chosen, show this by using the (P.W.C) method. 5 60 Environmental 400 20 20 Smart 200 10 50
Q1: A company is going to install a new asphalt plants. Three different type of plants are available. The essential differences in first cost, salvage value and expenditures are shown below. Asphalt Plant types (proposals) Speedy Investment cost (million IQD) Useful life (year) 100 Annual disbursement(million IQD) Salvage value (millionIQD) 10 50 20 Each plants will produce the same quantity of asphalt. Any capital invested in this company is expected to earn at least (10%) (before income taxes). Which plants should be chosen, show this by using the (P.W.C) method. 5 60 Environmental 400 20 20 Smart 200 10 50
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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