wo project studies for the construction of an engineering building are under consideration. On one study the cost of the building is P650,000 with a life of 20 years and a salvage value of P40,000. Yearly maintenance and repair is P1,800. The other proposes a first cost of P720,000, life of 30 years, and a salvage value of P60,000. Yearly maintenance and repair is P2,000. If the yield on the investment is 6%, determine which project study is acceptable by annual cost method. Draw Cash Flow diagram
wo project studies for the construction of an engineering building are under consideration. On one study the cost of the building is P650,000 with a life of 20 years and a salvage value of P40,000. Yearly maintenance and repair is P1,800. The other proposes a first cost of P720,000, life of 30 years, and a salvage value of P60,000. Yearly maintenance and repair is P2,000. If the yield on the investment is 6%, determine which project study is acceptable by annual cost method. Draw Cash Flow diagram
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Two project studies for the construction of an engineering building are
under consideration. On one study the cost of the building is
P650,000 with a life of 20 years and a salvage value of P40,000.
Yearly maintenance and repair is P1,800. The other proposes a first
cost of P720,000, life of 30 years, and a salvage value of P60,000.
Yearly maintenance and repair is P2,000. If the yield on the
investment is 6%, determine which project study is acceptable by
annual cost method. Draw Cash Flow diagram
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