TEI incorporated is considering the use of concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each and will last for 15 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. Assume annual taxes amount to 2% of the first cost and zero salvage value in both cases. .Evaluate the two options and recommend which one is to be chosen using the methods indicated. Money is worth 12%

TEI incorporated is considering the use of concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each and will last for 15 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. Assume annual taxes amount to 2% of the first cost and zero salvage value in both cases. .Evaluate the two options and recommend which one is to be chosen using the methods indicated. Money is worth 12%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A contractor has 50 men of the same capacity. They can complete the work in 30 days, the working day being 8 hours, but the contract expires in 20 days. He decides to put 10 additional men. If all the men get P300 per day for a full or part time day, & if the liquidated damages are P1T for every full or part day he requires over his contract time. How many days will he complete the work with the 10 additional men
A mining company is performing an economic analysis between two equipment. The initial price for Equipment is $200,000 and has a service life of 1 years with operating and maintenance costs of $8000 per year. If the equipment can generate gross annual revenues of $41000 and the company uses an annual MARR of 6%, calculate the equipment's discounted payback period
2.) TEI incorporated is considering the use of concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each and will last for 15 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. Assume annual taxes amount to 2% of the first cost and zero salvage value in both cases. .Evaluate the two options and recommend which one is to be chosen using the methods indicated . Money is worth 12% Using the EAC Method.EUAC Wooden Pole = ___________________________, EUAC Concrete Pole = _________________________Recommendation: ______________________________________________
If we think the investment is sensitive to annual revenues, what is its breakeven point for the project?
The Capitalized cost of a piece of eqpt was found to be P1.5M. The rate of interest was 12% with salvage value of P100k at the end of 10 years. Assuming that the cost of perpetual replacement remains constant, determine the original cost of the eqpt. a. P1,049,237.469 b. P1,490,237.469 c. P1,020,259.877 d. P2,049,237.469
Mr. Garcia sold his machine for P20,000 after using it for 6 years. He bought a new machine worth 75,000 with an expected life of 12 years and a salvage value of 2,000. The operating cost is P5,500 per year. The old machine which he bought for P50,000 when new will be useful for 10 years and a junk value of 1,000 but because of appropriate maintenance, it will be useful for another 5 years, no salvage value, with an annual operating cost of twice the new one. If money is worth 12%, was the engineer justified in selling the old machine? Use the ROR method. Show complete solution. Thank you
DRAW CASH FLOW DIAGRAM Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional cost of P250,000 at the end of every 8 years. The annual operating costs will be P150,000 at the end of every year for the first 5 years and P200,000 thereafter. In addition there is expected to be recurring major rework cost of P500,000 every 13 years. Assume i=12%
Plsss answer all
Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it requires P20,000.00 per year to maintain and must be replaced at the same amount with a salvage value of P300,000.00 after 5 years if the interest rate is 12% per annum. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A machine was purchased with an amount of P375,000.00 and a modification cost of P100,000.00 after 12 years. It needs regular maintenance that cost P15,850.00 per year. A software renewal cost of P7,433.00 every two years. What is the total capitalized cost that needs to prepare for the acquisition of this asset in pesos given that the interest rate is 0.12 annually?
1.) TEI incorporated is considering the use of concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each and will last for 15 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. Assume annual taxes amount to 2% of the first cost and zero salvage value in both cases. .Evaluate the two options and recommend which one is to be chosen using the methods indicated . Money is worth 12% Using the Annual Cost Method. Annual Cost of Wooden Poles = __________________ , Annual Cost of Concrete Poles = _________________ Recommendation: _____________________________________
Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment of $340,000, has gross revenues of $61,000, annual O &M costs of $13,000 and a service life of 16 years. What is the project's discounted payback period if the MARR is 8% per year? A. 13.5 years B. 10.9 years C. 7.7 years O D. 6.6 years If the second alternative has a payback period of 6 years, which alternative should be preferred based on the payback period? O A. The second alternative B. The first alternative