Show complete solution. 4. Atty. Gacayan invested P280, 000 which will be used in a project that will produce a uniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% of the investment. Out-of-pocket costs for operation and maintenance will be P80,000 per year. Taxes and insurance will be 3% of the first cost per year. Atty Gacayan expects capital to earn not less than 30% before income taxes. Determine if the investment is good and Calculate the following: a. Calculate using Rate of Return Method. b. Payback period of the investment. c. Present worth of the net cash flow.
Show complete solution. 4. Atty. Gacayan invested P280, 000 which will be used in a project that will produce a uniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% of the investment. Out-of-pocket costs for operation and maintenance will be P80,000 per year. Taxes and insurance will be 3% of the first cost per year. Atty Gacayan expects capital to earn not less than 30% before income taxes. Determine if the investment is good and Calculate the following: a. Calculate using Rate of Return Method. b. Payback period of the investment. c. Present worth of the net cash flow.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Show complete solution.
4. Atty. Gacayan invested P280, 000 which will be used in a project that will produce a
uniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% of
the investment. Out-of-pocket costs for operation and maintenance will be P80,000 per
year. Taxes and insurance will be 3% of the first cost per year. Atty Gacayan expects
capital to earn not less than 30% before income taxes. Determine if the investment is good
and Calculate the following:
a. Calculate using
b. Payback period of the investment.
c. Present worth of the net cash flow.
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