The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P16,500, the building costs P32,000,000, the equipment costs P13,500,000, and P7,000,000 working capital is required. At the end of 12 years, the land can be sold for P27,000,000, the building for P12,500,000, the equipment for P270,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P25,500,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment? A. P54,768,343.67 B. P48,680,894.56 C. P74,897,345.69 D. P44,660,089.64

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 P16,500, the building costs P32,000,000, the equipment costs
P13,500,000, and P7,000,000 working capital is required. At the end of 12 years, the land
can be sold for P27,000,000, the building for P12,500,000, the equipment for P270,000 and
all of the working capital recovered. The annual disbursements for labor, materials, and all
other expenses are estimated to cost P25,500,000. If the company requires a minimum
return of 25%, what should be the minimum annual sales for 12 years to justify the
investment?
A. P54,768,343.67
B. P48,680,894.56
C. P74,897,345.69
D. P44,660,089.64
Transcribed Image Text:The ABC company is considering constructing a plant to manufacture a proposed new product. The land costs P16,500, the building costs P32,000,000, the equipment costs P13,500,000, and P7,000,000 working capital is required. At the end of 12 years, the land can be sold for P27,000,000, the building for P12,500,000, the equipment for P270,000 and all of the working capital recovered. The annual disbursements for labor, materials, and all other expenses are estimated to cost P25,500,000. If the company requires a minimum return of 25%, what should be the minimum annual sales for 12 years to justify the investment? A. P54,768,343.67 B. P48,680,894.56 C. P74,897,345.69 D. P44,660,089.64
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