A certain warehouse is worth P700,000. The average value of the merchandise in the warehouse is...
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A certain warehouse is worth P700,000. The average value of the merchandise in the warehouse is P600,000. The annual insurance rate on the warehouse is 1% and the merchandise stored in the warehouse is 0.9%. A proposal for the installation of a fire sprinkler system is being considered. The system will cost P70,000 and will affect a savings of 50% in both insurance premiums. Annual maintenance cost is estimated to be P1,500 and annual taxes of P600 for the sprinkler system. The owners of the warehouse demand that the investment in such equipment be written-off within 10 years. Invested capital can be expected to earn a minimum return of about 20%. Would your advice the installation? (Use ROR and PW) A certain warehouse is worth P700,000. The average value of the merchandise in the warehouse is P600,000. The annual insurance rate on the warehouse is 1% and the merchandise stored in the warehouse is 0.9%. A proposal for the installation of a fire sprinkler system is being considered. The system will cost P70,000 and will affect a savings of 50% in both insurance premiums. Annual maintenance cost is estimated to be P1,500 and annual taxes of P600 for the sprinkler system. The owners of the warehouse demand that the investment in such equipment be written-off within 10 years. Invested capital can be expected to earn a minimum return of about 20%. Would your advice the installation? (Use ROR and PW)
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Answer rating: 100% (QA)
Ans No I would not advise the Installation of the Sprinkler System Notes Depreciation is No... View the full answer
Related Book For
College Mathematics for Business Economics Life Sciences and Social Sciences
ISBN: 978-0321614001
12th edition
Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen
Posted Date:
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