The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment? Find: Minimum annual sales for 12 years to justify the investment

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
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The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P15,000,000, the building costs P30,000,000, the equipment costs P12,500,000, and P5,000,000 working capital is required. At the end of 12 years, the land can be sold for P25,000,000, the building for P12,000,000, the equipment for P250,000 and all of the working capital recovered. The annual disbursements for labor,
materials, and all other expenses are estimated to cost P23,750,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment?
Find: Minimum annual sales for 12 years to justify the investment
Given:

(see attached photo)

At the end of 12 years
Land
P15,000,000.00
P25,000,000.00
Building
Equipment
P30,000,000.00
P12,000,000.00
P12,500,000.00
P250,000.00
Transcribed Image Text:At the end of 12 years Land P15,000,000.00 P25,000,000.00 Building Equipment P30,000,000.00 P12,000,000.00 P12,500,000.00 P250,000.00
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